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THE TRADE OF TO-MORROW

THE TRADE OF
TO-MORROW

BY

ERNEST J. P. BENN

Author of "Trade as a Science."

^ep*

NEW YORK
E. P. DUTTON & CO.

681, FIFTH AVENUE

1918

AUTHOR'S NOTE.

A friend, who has been good enough to read my
manuscript, and whose judgment on these matters
is better than mine, complains that this book gives
the impression that I am interested only in material
prosperity. I insist all through on the necessity
for production, and appear to argue that the mere
multiplication of things is in itself a measure of
human progress.

This criticism, which is perfectly just, prompts
me to insert this note, and to say that I should
be sorry even to appear to believe that human
development depended entirely, or even chiefly,
upon material progress. I am fully conscious that
right through this book I lay undue emphasis
upon quantity, more production, an emphasis
which I think is justified in view of the urgent need
of the nation for the creation of wealth. It will,
however, be obvious to the thoughtful reader
that Trade Councils constituted in the way here
suggested will give great opportunities for the pro-
motion of the human, the artistic, and the quality
sides of industry.

It will, further, be evident that such Councils
5

6 AUTHOR'S NOTE

could settle the underlying problems of the labour
difficulty, which the Observer calls a spiritual
revolt. They would place the workman on an
equal footing with the master in the supreme
control of industry, while interfering in no way
with the independence of either.

But having said so much, I do contend that there
is a pressing need for greater attention to the sordid
side of progress with which I deal in this book.
There has in the past been far too much preaching
of high ideals without regard to worldly needs, a
fact which explains the comparative failure of all
ethical appeals to the multitude. Social reformers
of every kind would find better ground for their
work if the material inadequacies of our present
arrangements could be eliminated.

E. J. P. B.

8, Bouverie Street, E.C.
July, 1917.

CONTENTS.

CHAPTER PAGE

author's note - - - 5

i. conclusions 9

ii. advice to reconstructors - 19

iii. the case for devolution - - 28

iv. the official and the business man 39

v. " audacity " in trade - "45

vi. the third partner - - "57

vii. getting rid of the shibboleths - 72

viii. the outcry for organisation - 79

ix. different schemes - - - 89

X. LABOUR - - - 99

XI. ASSOCIATIONS OF TO-DAY - - 112

XII. TRADE ORGANISATIONS ABROAD - 122

XIII. THE BOARD OF TRADE AND THE

MINISTRY OF INDUSTRY AND COM-
MERCE - 133

XIV. OUTPUT - I40
XV. EDUCATION AND RESEARCH - - 155

XVI. STATISTICS - 165

XVII. FISCAL REFORM - I79

XVIII. EXPORT - 189

XIX. SUNDRY QUESTIONS - 202

XX. A TRADE ELECTION - 206

XXI. RECOMMENDATIONS - 222

7

The Trade of To-Morrow.

CHAPTER I.
CONCLUSIONS.

" Get a really new world." — Lloyd George.

Frankly, the subject to which I have the temerity
to return is overwhelming. It is not one subject
at all : it comprises a thousand separate subjects.
Every point in it is full of controversy, and little
that one can say has any hope of finding general
agreement.

Yet my mission is a very simple one. It can be
expressed in a sentence. It is to plead for the
organisation of the trades of this country in such
a way that the three parties interested — (i) The
State, (2) the workman, (3) the capitalist — may be
able together to develop them to their fullest extent.

The first question which arises is this : Why
bother to organise trade at all ? We have done
very well in the past, and why not leave things
alone ?

There are many reasons why improvements must

9

io THE TRADE OF TO-MORROW

be made, some of them immediate and passing,
others fundamental and more important.

Among the former are such matters as :
Raising revenue ;
Repairing the wastage of war ;
Providing work for all upon demobilisation ; and
Foreign competition.

But among the fundamental and more important
considerations to be reckoned with are these : —

The increasing needs of the population demand
more goods, and the march of civilisation demands
less work, and the two can only be secured by better
arrangements.

It is one of our elementary duties to see that in
our industrial scheme there is as little waste as
possible either of material or effort.

Trade is a very large subject, far too complex
for any one mind to grasp properly. It is a subject
where one can very easily become lost in detail.
The problems of trade cannot be solved by a few
deputations to Ministers, or even by the hundreds
of committees which the Government are reported
to have appointed. They call for the establish-
ment of powerful and permanent machinery,
conceived upon a big plan. Industry should be
admitted to a place in the Constitution.

There are 28,678 local authorities in the United
Kingdom to attend to sewers, cemeteries, street
lighting, and other such details. The control of
our trade is surely worth at least as much
attention. In these pages my object is to help

CONCLUSIONS ii

in promoting the organisation of our trades under
the protection of the State.

In developing my argument for representative
Trade Unions, Trade Associations, and Trade
Councils, I shall refer to a variety of subjects, not
in order to express any opinion about them or influ-
ence the discussion of them in any way, but simply,
and I think this is, for the moment, more important,
to show that they cannot be satisfactorily handled
or discussed until our trades are made articulate,
are given a corporate existence and a voice, which
is not the case to-day.

In inviting attention, therefore, to such questions
as output, foreign competition, tariffs, labour,
wages, profits, exportation, economical production,
or any of the numerous aspects of the trading
problem, I do so, not to dogmatise upon them, but
only to insist that these problems are not capable
of solution by politicians or newspaper writers,
and to emphasise the need for the creation of the
proper authorities to deal with them.

The development of industry sounds simple
enough, and is simple enough if suitable machinery
is secured for the purpose. The problem is easiest
in its broadest aspect : it is in the details that it
becomes embarrassing. We decide to multiply by
ten our output of shells, and a paper plan is made
in a few minutes ; but in practice it requires as
many hotels, offices, and hutments as would make
a respectable city, and a Defence of the Realm Act,
and a series of Munition Acts to boot. Presently

12 THE TRADE OF TO-MORROW

we shall require to multiply our output of more
peaceful commodities, and there will be no Acts
to help us. What plan can we, therefore, adopt ?
What are the ways and means that are necessary
to effect our object ?

When the war is over we shall be faced with the
necessity of raising to its highest point the produc-
tive capacity of the nation. That is a proposition
which nobody will deny. Every citizen, worthy of
the name, will require to feel assured that he or she
is contributing the maximum possible to the relief
and removal of the burdens which the war has put
upon us. According as we arrange ourselves well
or badly, so will the results of our individual efforts
be great or small.

General statements of this kind are easy, and if
the writing of platitudes and the expression of
pious hopes could effect the salvation of the country
and the Empire, then surely every Briton must feel
perfectly happy and safe to-day. As, however, this
is not the case, it becomes necessary to do something
— and that is when the trouble begins. A thousand
voices are endeavouring to explain at the same
moment. Each voice has a message, each is worthy
of a hearing, but among " the tumult and the
shouting " all are ineffective.

In the endeavour to gain a hearing amid such a
babel, I propose to adopt an unorthodox method
of argument.

I start with my conclusions. These can be stated
quite briefly and plainly, and when the reader has

CONCLUSIONS 13

studied the next few paragraphs he will have
gathered the gist of all I have to say. The rest of
the book is mere " chatter," " chatter," which I
venture to hope many may find of interest, upon
some of the thousands of issues raised by this enor-
mous problem of trade, industry, and production.

The chatter is intended to lead the reader to
think, as I do, that the subject is too complicated
and the interests involved are too great for any
Government to attempt to handle, and that the
only thing the Government can do is to adopt a bold
scheme of devolution. The control of industry must
be delegated to authorities in each trade.

British trade is capable of indefinite expansion.
This is impossible on 1914 lines and equally impos-
sible on the lines that we have adopted since 1914,
great central Government schemes run by officials.
It depends upon a proper balancing of the various
forces engaged, the workman, the capitalist, the
State.

Throughout this book I constantly refer to three
parties concerned with industry. The rough divi-
sion into three is convenient, although it would be
more correct to subdivide further and speak of
(1) the consumer, (2) the nation, (3) the workman,
(4) the salesman, (5) the management, (6) the
employer, (7) the capitalist. All these parties
require special classification and separate treatment
in any finished scheme.

In the ordinary way some apology and explana-
tion would be necessary for the production of two

14 THE TRADE OF TO-MORROW

books on the same subject within the period of a
year. " Trade as a Science," while it covered, so
far as the details of the subject are concerned, a
different ground for the most part from this present
volume, yet contained the same arguments and had
the same purpose. But, having regard to the
importance of the subject and also to certain develop-
ments which will be apparent to the reader in the
writer's views and plans, there is perhaps sufficient
excuse for this further intrusion into the debate.

Since the publication of " Trade as a Science,"
some scores of books have appeared, and numbers
of schemes have been put forward in the effort
to help along the reconstruction through which we
are passing. It is no disparagement to any of these
to say that most of them are concerned with what
I regard as the details of the problem, and all serve
to emphasise the view here advanced, that the
only way for the nation to deal with the matter is
to adopt some great scheme of decentralisation and
set up in this way adequate machinery to under-
take so enormous a task.

The following is, therefore, in bare rough outline
the machinery which the present writer suggests
as necessary.

(i) A Minister of Commerce and Industry.

A Minister of Commerce should be appointed for
the purpose of fostering and facilitating the self-
advancement of British Trade.

To ask for another Minister at a moment when we

CONCLUSIONS 15

are so overburdened with this type of functionary
requires a very strong case, but that case is self-
evident when it is remembered that in the whole
crowd of statesmen who now look after our welfare
there is not one who accepts any real responsibility
for such matters as output, export, economical
production, science in industry, or education as
applied to trade.

The duties of the Minister of Commerce would be
chiefly concerned with the setting up of Trade
Councils within the different industries, and the
regulation and assistance of these bodies when
created.

(2) Trade Councils.

There should be created in connection with every
industry a Trade Council to which the Government
would delegate every question connected with that
industry.

These Councils would relieve the Government of
all details, in the same way that the County Councils
undertake the detail work connected with their
localities. They would be statutory bodies having
a similar status to the County Councils. Powers
should be conferred upon them from time to time
by Act of Parliament or Orders in Council, placing
in their hands necessary work as it arises, in exactly
the same way that powers are now conferred upon
local authorities as new needs come to light.

These Trade Councils should consist of elected
representatives of the Trade Associations and the

16 THE TRADE OF TO-MORROW

Trade Unions, one-third of the members being
drawn from each source, as explained below. The
remaining third would be composed of the official
element, representatives of Government depart-
ments, men of science, and nominees of other
bodies having an interest in the trade.

(3) An Industrial Franchise.

The one weak spot apparent in all attempts to
deal with trading matters is the absence of repre-
sentative responsibility. This point will be argued
later. It can be overcome by an extension of
the franchise to cover trading interests. Every
citizen now has the Parliamentary vote and the
municipal vote, and he should be given in addition a
trading or industrial vote. This vote would be
available for use in connection with a Trade Union
or a Trade Association. Thus each man and woman
would have a direct voice in the three great branches
of national administration : (a) Imperial Govern-
ment, (b) Local Government, (c) Industrial Govern-
ment.

(4) The Trade Union.

The introduction of a new electoral principle as
explained above would give to every working man
the right to be a voting member of some Trade
Union, and the principle of compulsory membership
of a union, over which labour has fought so strenu-
ously in recent years, would thus receive a measure
of acknowledgment. The unions themselves would

CONCLUSIONS 17

secure a semi-official status which need not in. the
least degree interfere with their independence. The
Trade Union of an individual industry thus estab-
lished upon a comprehensive and thoroughly repre-
sentative basis, would elect periodically its share
of the members of that industry's Trade Council.

(5) The Trade Association.

In exactly the same way as with the Trade Union,
the Trade Association would receive a measure of
State recognition, and every employer in a particular
industry would have the right of membership or a
right to vote in connection with the affairs of the
association. This need not necessarily mean full
membership of the association. The Trade Associa-
tion could continue as at present to undertake special
work which interested full subscribing members,
but it would assume a larger responsibility towards
the whole industry. The full body of electors in
that industry would have the right to vote in the
affairs of the association so far as they concerned
public functions put upon that association. These
associations would then elect their proportion of
the members of the Trade Councils.

The creation of machinery on some such lines as
these would provide the State for the first time with
a means of ascertaining the views of the industry.
It would also provide industry for the first time with
a means of making its voice heard. It would remove
from the sphere of politics dozens of questions which
are domestic trade questions and not matters for

18 THE TRADE OF TO-MORROW

Imperial Parliament. It would enable the State,
through its Minister of Commerce, to take an active
interest in and a proper responsibility for the
development of each industry. It would, in my
judgment, give an impetus and a strength to trade
and industry which is all that is necessary to enable
it to meet the unprecedented burdens put upon the
country by the war, and which must be met in the
long run by the trading community.

This book is not a treatise on economics. The
only argument in it is an argument for the admission
of industry to a place in the Constitution and its
organisation upon a representative basis. It comes
into the class of propagandist literature and expresses
the somewhat incoherent views of that peculiar
creature commonly known as the " business man."
It will probably create a condition of confusion in
the mind of the reader, and in that way will serve
one of its objects. If it helps to show how confused,
complicated, and immense are the problems of
industrial development, it will strengthen the argu-
ment for decentralisation, devolution, and delega-
tion. It is for the economists and politicians to
study and criticise these proposals.

CHAPTER II.

ADVICE TO RECONSTRUCTORS.

Starting with the Reconstruction Committee of
the Cabinet, there are literally hundreds of bodies
debating and discussing the problems of reconstruc-
tion, and it may not, therefore, be out of place to
put down a few of the leading considerations which
all these people should have constantly before them,
if their conclusions are to be of any value.

Some folk, especially those who have enjoyed a
brief spell of authority — and these are tens of
thousands — have become so used to war conditions
and methods as to forget that this is the land of
liberty. It is well to remind such that, when the
needs of war are passed, this old country will not
tolerate a continuation of anything in the nature
of the numerous permits, controls, exemptions,
licences, prohibitions, and badges, to which the
ordinary civilian has willingly submitted since 1914.

In order to defeat Prussian militarism we have had
to adopt most of the evil methods against which we
are fighting. We are subject not only to military
despotism, but to a far worse civil despotism, which,

19

20 THE TRADE OF TO-MORROW

nevertheless, we welcome as a means of winning the
war. But if all the little Jacks-in-office who now
control us imagine that their power will last when
the war is over, they are mistaken. The nation
has had enough forms to fill up and enough returns
to make to last it for many years to come.

Most of the new ministries, which have sprung up
like mushrooms, must come to an end when the
transient need has passed. A cursory glance at
the construction of these bodies is sufficient to prove
tfiis. The Prime Minister appoints some well-known
man as, let us say, Minister of Building. Fifty
leading architects and builders — recognised experts
— immediately offer their services. An organisa-
tion has to be improvised within a few weeks. The
Charity Commissioners, the Governor of the Isle
of Man, the King's Proctor, the Duchy of Lancaster,
and the Lee Conservancy Board kindly lend the
services of some of their derelict officials, and in
order that the new office may live up to all the best
traditions of red tape the Steward and Clerk of
Halemotes of the County Palatine is installed as
" Establishment " Officer.

These persons then proceed to appoint a thousand
clerks and messengers — a thousand is always the
minimum. When they have exhausted the appli-
cants with influence the public swarms in. There
is no examination, no test of qualification. With
this motley crew the Minister of Building manages
somehow to accomplish the task for which he was
appointed. The work costs five times as much as

ADVICE TO RECONSTRUCTORS 21

it is worth, hardship and injustice are scattered
broadcast, blunders innumerable are made — but
we are at war, and this sort of thing is the best we
can do.

As soon as the rush of work connected with the
Building regulations is over, the army of officials
in the Hotel Royal begin to think of the future.
The quarters are pleasant, the pay is good, the work
unexacting, and the taste of power delicious. So a
Reconstruction Committee is set up to prepare
great schemes for the future. But when the war
is over the fifty leading experts, who are mostly
giving their services, will hasten back to their own
affairs, and the brains and push and energy of the
Ministry will be gone. This, of course, does not
worry the professional official in the least : he will
be glad to see the back of these hustling persons,
so that he can establish himself and his minions
behind a permanent parapet of forms and jackets,
minutes and memoranda, imprests and precedents,
all, of course, in triplicate.

Let us reconstruct by all means. Indeed, if we
are to live, we must reconstruct, but at all costs the
fatal blunder must be avoided of construction upon
the flimsy foundation of improvised war-time make-
shifts. All these hurriedly conceived and badly
constituted Ministries, Controllerships, and Director-
ates must be swept clean away, and if good is to be
done a new start made upon surer and more solid
foundations.

" We are living," says a leading manufacturer,

22 THE TRADE OF TO-MORROW

" under a condition of State interference such as no
man dreamed of as possible before the war. Bureau-
cracy as we have got it to-day, and as it will remain
after the war, is going to be a terrible danger unless
controlled. Employers and workpeople are all
going to be the slaves of the official."1

" There is a danger which threatens freedom in
the demand that the State should step in and take
charge of branches of industry. . . . These are
Prussian methods. We, as Liberals, desire to pre-
serve independence and individuality."2

The latter-day alliance between Prussianism and
Socialism is one of the most remarkable phenomena
of these extraordinary times. Let us be quite clear
that we want Reconstruction in order to repair the
ravages of war, and to equip us the better for the
march of progress, but not for the purpose of per-
petuating the millions of war jobs which we have
had to create in the last three years.

To the present writer this point is of great import-
ance, because the scheme here suggested and already
outlined in " Trade as a Science " involves the
appointment of many thousands of trade officials,
and unthinking critics have been inclined to over-
look the essential difference between a clerk in
Whitehall and an expert trade commissioner in
Pekin, and to dismiss the scheme with the old sneer
— " Another army of officials ! "

i Sir Richard Cooper at Bradford and District Manufacturers'
Federation, April 16th, 1917.

2 Viscount Bryce at the National Liberal Club, March 29th, 1917.

ADVICE TO RECONSTRUCTORS 23

For this reason I desire to put great emphasis
upon the absolute necessity of wiping out at the
earliest moment all war-time civilian appointments.
The holders of these posts have no claims on the
nation. The soldier will be demobilised without a
second consideration, and there is no reason why
the man who has preferred to do his fighting in
Westminster instead of Mesopotamia should have
any greater claim to continuity of employment.
He has enjoyed the market rate of pay, the soldier
has not. He has in most cases derived material
advantage from the war. Where there has been
sacrifice it has been on the lowest scale and he should
be the first to go.

If it is essential that in a few cases these jobs must
be perpetuated, then nine times out of ten there are
better men in the Army who have stronger claims
than the present occupants. It is, of course, obvious
that here and there a piece of war work may have
a permanent value and its continuance may be
highly desirable, but such considerations must come
from outside and not from inside. There must be
a definite demand from independent sources, and
little or no weight must be attached to schemes
which come from interested inside parties.

Another fundamental consideration which Would-
be Reconstructors should carefully study in attempt-
ing to apply war-time experiences to peace conditions
is connected with the office of the Censor. Since
1914 the Government of the country, both civil and
military, has enjoyed an immunity from press

24 THE TRADE OF TO-MORROW

criticism which is unprecedented. Two causes have
brought this about : first, the Defence of the Realm
Act, and second, and even more powerful, a deep
sense of patriotic responsibility on the part of the
Press. It must not, however, be assumed that
because some authority has been allowed to work its
sweet will without serious protest, the public or the
Press is unaware of its grave blunders, of the in-
justice it has perpetrated, or of the damage it
has done to all sorts of innocent interests. All this
is recognised as the price of war, but nothing of
the kind will be tolerated for five minutes for any
other reason.

The Prussian is the slave of the State, but the State
is the servant of the Briton. This fundamental
distinction must never be forgotten. In the midst
of war we are told that Germany has adopted
National Service, and we accept that argument as
a good reason why we should submit to that stupid
scheme for " devitalising and misdirecting the
energies of the nation." But in peace time such an
argument would have an exactly opposite applica-
tion.

There is another point which Reconstructors
should be prepared to meet. The vested interests
in some temporary war department may be relied
upon to play the financial card very skilfully. We
shall be told that we have spent many millions in
establishing a department, providing it with build-
ings, plant, equipment, and what not, and that surely
this money must not be thrown away. That is

ADVICE TO RECONSTRUCTORS 25

a false argument. In making war we have de-
liberately thrown away thousands of millions, and
whether it has gone in bricks and mortar in West-
minster, machinery in Coventry, or powder in
Flanders, it is all waste, and the only people who
are entitled to annuities out of the process are those
who have suffered on the actual battle-field.

We must avoid buying a lot of silly schemes on
the principles which guide the woman at the draper's
sale. The aim of Reconstructors should be to blot
out the effects of the war as speedily and as effec-
tually as possible, and not to perpetuate one of its
most glaring abuses.

Reconstructors must also be very careful to see
that their suggestions are financially sound. It is
not uncommon to hear it argued that because we
can raise a thousand millions for war, therefore
we ought to be able to raise a like sum for a better
purpose. But we have not raised any such sum in
reality. All we have done is to raise threepence
and send a bill for ninepence to posterity. I am
reminded of an old merchant I used to know who
carried on his business by means of bills. He became
so accustomed to this system and so blind to its
meaning that he developed the habit of saying
whenever he signed a six months' acceptance :
" Well, thank God, that's paid." That man's
successors had no such reason for thankfulness, as
they found upon his demise that instead of a large
estate, which they hoped to enjoy, there was a
considerable deficiency.

26 THE TRADE OF TO-MORROW

One of the worst — because the least apparent —
of the evils which war has brought upon us is a
false prosperity, which is chiefly due to excessive
inflation of the currency and the lavish creation of
credits.

It becomes, therefore, very necessary to insist
that there is no vested interest in war profits,
whether they take the form of extravagant wages,
inflated dividends, high prices, or soft jobs.

A splendid example of the mixture of candour and
folly in this matter was provided by Mr. Neville
Chamberlain in an interview with an American
journalist reported in the Observer on April 29th,
1 917. " Another great service which the war has
done to Britain has been to teach us all to view with
real complacency the expenditure of Government
money upon public works." This sentence robbed
of its context is not quite fair to Mr. Chamberlain,
but it serves our purpose because it reflects the mind
of many of those who have been called to rule over
us in these latter troublous days. When the war
is over we shall have to learn to view with real
alarm and not complacency the expenditure of any
public money without good cause shown. If the
British Empire is to be worthy of its name it must
be financially sound, and the devil's dance in finance
set going to the order of the Kaiser must be stopped
at the first possible moment. This is not to say that
we cannot raise unlimited sums for necessary and
essential purposes, but to enable us to do so the
present unthinkable waste in all departments must

ADVICE TO RECONSTRUCTORS 27

be absolutely stopped and there must be no " com-
placency."

Reconstructors should also consider another
series of important points, when they touch upon
trading matters. We must avoid in every case
great building schemes which begin at the top.
The most general criticism which can be justly
levelled against our war methods is that we have
acted irrationally, always trying to build from the
top, by means of huge central departments with
swarms of officials. The rational thing is to begin
building from the bottom. Whatever the problem,
first find the unit and work from that.

When dealing with industry this is a vital point.
Trade must be studied and arranged trade by trade,
one trade at a time, and the unit must be a single
industry.

The Reconstructor would also do well to get a
clear idea of the proper functions of an official and
the proper place for a business man. They are
different types, with different spheres of usefulness,
and the mixing up of the two is fatal. The official
has always been known to be a failure in commercial
and industrial matters, and since 19 14 it has become
apparent that the business man is not to be trusted
in an official capacity.

Lastly, the Reconstructor should work in the
daylight. Every theory, every idea, every draft
should be available to all parties likely to be inter-
ested. When war is over we must give up the habit
of setting a scheme in motion first, and discussing
it afterwards.

CHAPTER III.

THE CASE FOR DEVOLUTION.

By far the most difficult task which confronts the
industrial reformer is to define exactly the functions
and duties of the Government. The developments
of the last three years have not made this easier.
We have on the one hand the extreme individualism
of the past and on the other the alarming socialism
of the present ; for the wildest dreams of the wildest
socialist have materialised into amazing fact, and
we are living to-day under a system of State control
of production and State interference in trade that
would have been inconceivable in 1914.

The battle of the immediate future will be between
those who think that the State should continue in
the trading career which it has recently adopted,
and those who believe that we should revert to
unadulterated private enterprise. In the end
neither party will win : because both systems are
thoroughly bad and foredoomed to failure. Unre-
stricted individualism is admitted on all hands to
be incapable of meeting the world crisis with which
we are faced. State trading, on the other hand,

28

THE CASE FOR DEVOLUTION 29

is also an impossible proposition. Those who have
experience of it will agree that it lacks certain vital
elements which are inseparable from success in the
realm of commerce and industry.

The endeavour of the writer is to find a scheme
which will unite the best features of the two systems.
The State must help in industry ; it must assume
a measure of control : but without individual initi-
ative and individual interest, industry can not and
will not thrive, nor will the world secure the benefits
which it is entitled to demand from it.

The war has given the Socialist a chance to show
what the State can do in trade and industry and
has convinced most right-thinking people of what
they already suspected. It has shown that the
more the State has to do with the actual work of
production the more the waste and extravagance
involved.

There is here no intention to complain of what has
been done since August, 1914. We were admittedly
unprepared for military war, and we had to face
a situation which was unparalleled in history.
Miracles were necessary, and, needless to say,
miracles were not performed. But we got as near
to miracles as we could, and we have achieved the
impossible as far as that could be done. Under
these circumstances it would be ungracious to cavil
at the innumerable blunders of the past few years.
The subjection of Germany would never have been
accomplished if the State had not taken the task in
hand — without regard to anybody's interests,

30 THE TRADE OF TO-MORROW

without regard to the future, or to anything but the
immediate prosecution of the war. The fact that
the most violent interference with everything and
everybody has been necessary, the fact that destruc-
tion and waste, apart altogether from the battle-
field, have been carried on at a rate that is appalling,
must therefore simply be credited or debited to
" a state of war." But it cannot be too emphatic-
ally stated that this sort of thing has been tolerated
for the sole purpose of defeating Germany, and
when that purpose is achieved all these abuses
must be brought to an end with the least possible
delay.

This point cannot be made too frequently r>r
pressed home with too great force, because there
are to-day numerous groups of persons with ready-
made plans for continuing many of the abuses
which we have had to suffer since 1914.

Mr. Neville Chamberlain, whose candid indiscre-
tion we have already acknowledged, voiced the
views of numbers of our war-time governors, in the
interview which he gave to Mr. Edward Marshall,
an American newspaper correspondent. " Many
things," he said, " which before the war were
regarded as the fads of enthusiasts will be regarded
as wise programmes after the war ends." In
my view Mr. Chamberlain was unduly optimistic.
He allowed the splendour of the St. Ermin's Hotel
and the glorious temporary power of the Director-
ship of National Service to carry him away. If he
had only been able to divest himself of hiis official

THE CASE FOR DEVOLUTION 31

surroundings and peep into the thoughts of some of
the best British brains, he would have discovered
that there was the deepest resentment at the way
in which the Defence of the Realm Act has been
used to foist upon the community all sorts of stupid
" fads of enthusiasts " ; that the force of patriotism
was sufficient to keep this resentment from finding
expression in the middle of the war, but that when
the day of peace comes these enthusiasts, including
Mr. Neville Chamberlain himself, robbed of the
advantages of military necessity, will have to
justify all the silly schemes and programmes upon
which they have squandered the public money.

The war has done many remarkable things, but
nothing has been more astounding than the complete
abandonment of all the principles of Liberalism,
an abandonment the strength of which has been in
direct ratio to the pre-war strength of the Liberalism
of our Dictators. Abraham Lincoln, echoed since
by many great English Liberals, defined Liberalism
as " Government of the people, by the people, for
the people." Mr. Lloyd George has created a
system of Government in which the very last folk
to be consulted, or to be considered, or to have
any voice in the matter are the people who are
governed.

But in abandoning Liberalism we have not
adopted the old-time alternative of Conservatism.
In the fight for liberty we have not only robbed the
people of their liberty but of their property. We
have invented a most remarkable mixture of the

32 THE TRADE OF TO-MORROW

principles of the Kaiser and of Mr. H. G. Wells,
which will provide the historians and economists
of the future with ample material for debate.

To return to trading matters, it would seem to be
wise to re-study the problems of Government or
State trading from the beginning, and it must cer-
tainly be understood that war-time experiences do
not apply to peace-time conditions. In time of
war it is necessary to allow the Government official
to dabble in trade. Nobody but a Government
official can order supplies for the forces. But that
does not mean that the Government official buys
these goods to the best advantage, arranges for their
manufacture to the best advantage, or produces them
in the most economical way.

In the ordinary course the Government official
is the very last person who should be entrusted with
the direction of the practical side of industry. He
is constitutionally unfitted for the job, and the
terms on which he holds his appointment render him
further disqualified as a buyer or seller or producer.
There is in his case an absolute absence of respon-
sibility, and no commercial transaction can be car-
ried through satisfactorily in these circumstances.
In Government enterprises nobody pays, nobody
suffers, nobody runs any risk. The position of the
Director of a Government establishment is entirely
different from the position of the Director of a
properly constituted industrial concern. The latter
runs the risk of failure and takes his chance of
success, and he and all those dependent upon him

THE CASE FOR DEVOLUTION 33

rise or fall by the skill which he displays in the con-
duct of affairs. But with the Government official,
the position is entirely different. He has only two
prospects before him : a peerage if he succeeds, a
pension if he fails. " Success " is hardly the word
to use in connection with a Government Depart-
ment which manages to perform its functions in
accordance with its terms of reference, because it
starts out with advantages arising from the authority
which it enjoys, advantages which are denied to
any ordinary commercial enterprise.

But the objections to Government trading can
be put upon a broader basis if it is admitted that
the need of the nation is to secure the absolute
maximum in output of all descriptions. To
secure that maximum it is necessary that every
individual member of the nation should be continually
employed to the best advantage. If it were possible
for the Government to arrange to take into its'
employ every inhabitant of these islands and organise
them thoroughly, to equip itself with the best
type of machines for every purpose, and to put
everybody to the job for which he is most fitted,
and if that process would not tend to decrease individual
effort, then something might be said for Government
trading. But if the Government confines itself,
as of course it must, to undertaking a part only of
the productive work of the country, and thus puts
itself into competition with the rest of the nation,
it will be found that such action simply discourages
those who are not in Government employ, if indeed

34 THE TRADE OF TO-MORROW

it does not make it impossible for them to carry
on business at all.

To secure maximum output, therefore, it is neces-
sary for the Government to refrain from any form
of competition with any of its subjects, and to devote
itself to helping and encouraging and fostering the
activities of all of them for the benefit of all.

If any reader should desire to be strengthened in
his views as to the blunders of State, Municipal, and
other forms of public trading enterprise, he could
not do better than study the writings of the advo-
cates of these schemes. There are, of course, very
strong reasons why public authorities should take
in hand several well-defined forms of public service.
Wherever there is anything in the nature of what are
known as public utility services, the case for public
ownership is exceptionally strong, but when State
trading goes beyond its province in the way that it
has been obliged to do during the war, abuses of
a very serious character invariably arise.

In May, 1915, the New Statesman published a
Special Supplement on " State and Municipal
Enterprise," and gave an exhaustive review of the
present position. The writers are frankly in favour
of a very wide extension of this form of public
activity, and hail with delight the great steps for-
ward that have been made since 1914.

It is especially interesting, therefore, to notice the
examples of State trading which they single out for
special praise and as models of the sort of thing
which should be extended in all directions.

THE CASE FOR DEVOLUTION 35

" We need only mention, to begin with, the
colossal Government factories constantly at work
in many different countries in the various State
monopolies, making tobacco, cigars, matches,
gunpowder, alcoholic drinks, salt, potash, mineral
waters, carpets, porcelain, the finest engravings,
and what not, simply for sale."

To the doctrinaire this sort of example may inspire
confidence and enthusiasm, but to any who have the
most elementary knowledge of trading conditions
and requirements, there is not a single case
covered by the above paragraph which would
warrant any support to the idea of further
development on the part of public bodies in these
directions.

Many of these illustrations are examples of the
grossest and worst forms of monopoly which it is
possible to imagine. Monopoly in private hands is
bad enough, but when the State makes use of its
powers to foist upon its subjects tobacco, cigars, and
matches such as the poor Frenchman is doomed to
use, reasonable people sigh for liberty.

If the New Statesman is to be taken seriously,
it should be informed that a revolution will take
place in these islands before the average Briton will
tolerate the sort of. thing that the continental
nations have to put up with in this way.

It is even more surprising to find the New States-
man holding up salt as an example of benevolent
and wise Government action. Further inquiry would
surely show that the tax on salt which is the result

36 THE TRADE OF TO-MORROW

of such action constitutes one of the gravest dangers
to the health and welfare of the States who are so
misguided as to adopt it.

The carpets and porcelain referred to are the
" Gobelins," " Sevres," and " Dresden " factories,
but these are not examples of commercial enter-
prises. They are really part of the system of
national education, and I should be very glad indeed
to see the educational authorities in this country
spending more of their energies in connection with
the production of works of art.

The same publication gives another excellent
quotation, which instead of strengthening the case
for State trading is the most emphatic condemnation
of it that could be imagined. The New States-
man quotes with pride, as showing the benevolent
change that has come about within a single genera-
tion, Mr. Lewis Harcourt, then Secretary of State
for the Colonies. Mr. (now Viscount) Harcourt
is reported to have said : —

" In these days the Colonial Office has more the
attributes of an immense trading and administrative
concern than those of earlier days, when it was a
mere machine of Government. My days and nights
are spent in the study of medicine, in the details of
railway construction, with a desire that the smallest
sum of money may lay the largest number of miles
of track in the fewest possible days. I am a coal
and tin miner in Nigeria, a gold miner in Guiana.
I seek timber in one colony, oil and nuts in another,
cocoa in a third — copra and copal, seisal and hemp,

THE CASE FOR DEVOLUTION 37

cotton, coffee, tobacco are common objects of my
daily care."

This is surely a most remarkable case of the misuse
of an illustration. It may serve the purpose of the
Fabian nursery and strengthen the student's attach-
ment to the principles he holds dear, but to anyone
with commercial experience it has the exactly oppo-
site application.

The whole tendency of business for a hundred
years past has been specialisation. The only
successful industrial developments have been along
the lines of specialisation. The difficulties of
succeeding in any department of manufacture or
production are now so great that it is essential that
every business man should confine his studies and
effort within a limited compass. And, yet, if you
please, we are asked to believe that Mr. Lewis
Harcourt, cultured and charming as he is, but whose
apprenticeship to trade is not upon the records, can
be a successful coal miner, tin miner, gold miner,
lumber man, oil and nut merchant, cocoa importer,
and half a dozen other things every day of his life.

The answer to Mr. Harcourt is perfectly simple
and obvious. It is that the office over which he
presides is under no obligation to make a profit,
has no account to render to proprietors or share-
holders, is not dependent for its existence upon the
revenues which it can earn, but has at the back of
it the inexhaustible funds of the poor British tax-
payer, and in consequence can afford to allow a most
estimable aristocrat to trifle with all these important

3«S THE TRADE OF TO-MORROW

matters, to the sorrow, indeed chagrin, of the people
who know.

It has for long been recognised that the orthodox
official mind is not the type that is required for
success in business. After our painful war experi-
ences it will equally come to be recognised that the
successful business mind is the very last that one
expects to succeed in any official capacity. Having
arrived in this way at both sides of the question, it
will be seen that there is a very definite dividing line
between the functions of the official and the func-
tions of the business man, and that beyond that
line neither can travel with success.

It would not be fair to base arguments upon the
experiences of 1914-1917, if it were admitted that
the numerous developments of those days were
merely war-time makeshifts. But in view of the
attempt to bolster up and fortify these houses
built upon the sand, we are entitled to protest.

CHAPTER IV.

THE OFFICIAL AND THE BUSINESS MAN.

A survey of most of the attempts of Government
Departments to handle business propositions creates
in the mind of the business man a feeling of pity.
All these things seem so simple on the face of them,
and the learned Government officials,, with their
carefully prepared theoretical minutes, are generally
able to make out a good case for any action which
they propose to take. But commerce is a compli-
cated thing, and those who have experience of it
have reason to know that simple theories do not
always work out in practice.

The official mind is not a business mind. It
delights in points which for commercial purposes
do not exist and which merely bore the business
man. The impossibility of mixing these two types
has been illustrated a thousand times since it became
the fashion for business men to give their services
to Government Departments.

The business man cannot accustom himself to
official etiquette. He cannot see the necessity for
the innumerable references to other departments
and the consequent intolerable delays.

39

40 THE TRADE OF TO-MORROW

It may not be generally known that if a post card
is sent to a Secretary of State to call his attention
to some trivial point, that post card is threaded with
an official tape, attached to a Minute Sheet, and the
whole bound up in a manilla jacket. On the front
of the jacket will be written a whole mass of numbers
and references, inserted there by a registry which
no doubt understands them. Below this informa-
tion are three or four columns in which are entered
the date the document is received, the name of the
person to whom it is referred, and the date upon
which he passes it on. There is accommodation on
the front of this jacket for eighty or ninety such
entries. The ambition of the official mind is only
achieved when the whole of the front of the jacket
is completely occupied with the names of the officials
to whom the matter has been referred.

This post card will wander about Whitehall for
months and be sent to everybody who is anybody,
" for observations." No well-constituted Govern-
ment official takes action until this process of con-
sultation has been made as complete as possible.
The really expert official is the one who can think of
the largest number of other officials who ought to
be consulted about every point. The super-official
is the one with a mind so highly trained that it
can discover some good reason why every matter
submitted to it is not really a matter for it to
decide at all, but for the consideration of some other
department.

This is the way in which the British tax-payer is

THE OFFICIAL AND THE BUSINESS MAN 41

doomed to do his business. The joke of the whole
thing is that these numerous references from great
minds which have secured official distinction on the
strength of their classical education, produce in
the end nothing but error. These are the methods
which fix the price of the potato at £8 a ton and
forget to mention whether that is a minimum or
a maximum figure. They evolve an Order that
gooseberries shall be £20 a ton when the market
only asks £14. They load a ship, unload it, and
load it again with the same cargo before it is
allowed to sail.

There is another way in which the official fre-
quently goes wrong when he enters the trading
field. He has been educated in the theory of
Government and taught to believe that the under-
lying principles of every department are the same.
That is why when he gets a problem to solve he
passes it round from department to department.
In exactly the same way he makes his career and
gets his promotion by being passed on from one
department to another. This sort of thing will not
do in business. Experience in the Post Office may
qualify a man for a high position in the Inland
Revenue Department, or success in the India Office
may be the road to a better salary at the Treasury.
But when we come to trade, experience gained in
one trade is very seldom of any use in another.
Each trade has its peculiarities ; each trade has its
habits and its methods of doing business : and ex-
perience gained in the manufacture of gas will be

42 THE TRADE OF TO-MORROW

of no use and may even be a disadvantage in deal-
ing with the problems of the timber trade.

The endeavour of the writer is to show that a very
careful distinction should be made between the func-
tions which are proper to the Government and those
which should be left to the individual : and it
becomes obvious that in trading matters, or any-
thing nearly appertaining to trade, the Government
and its officials are out of place. The old Board
of Trade furnishes an excellent example of the proper
functions of the Government. So long as it confined
its attention to the regulation of such matters as
bankruptcy, harbours, railways, load lines, life-
saving appliances, factory inspection, weights and
measures, company registration, and other similar
devices for carrying on work which may be described
as the " policing " of trade, it was within its proper
limits. But its later developments into Commercial
Intelligence Branches and Labour Exchange Depart-
ments, have gone over the line which should define
the activities of the official.

The Commercial Intelligence Branch of the Board
of Trade may be examined in this connection. Here
is another case where theory does not work out in
practice. It would seem to be a very proper proceed-
ing for the Government to endeavour to collect
commercial intelligence for the benefit of traders.
But the fact that notwithstanding the most strenuous
efforts the work of this department has never grown
to the size of a respectable merchant's office, shows
that there is something wrong. As is pointed out

THE OFFICIAL AND THE BUSINESS MAN 43

elsewhere, the mistake in this matter was the
endeavour to comprise within a single department
the interests of all the trade of the country. As a
matter of fact, every industry requires its own
commercial intelligence branch, and each industry
could justify an office of its own of far larger
dimensions and greater activities than the whole
of the existing Commercial Intelligence Department.
We must recognise that the official is no business
man and the business man is no official. The busi-
ness man's life is made up of successes and failures.
He runs, as everybody knows, what is called a
profit and loss account. Every business has its
losses as well as its profits, and the successful busi-
ness is that which has more profits than losses and
thus finishes with a balance on the right side. The
business man is free to make mistakes and always
does make them, but so long as he is right rather
more often than he is wrong, he justifies his existence.
These are the basic principles of trading. But
they cannot apply to Government activities. The
Government in theory cannot make mistakes. It
must always be right. Hence the need for the
classical scholar with his minutes and his jackets
and his innumerable references, things which ought
to be unknown in business. The very essence of a
business contract is time. Every trading transac-
tion must have a time limit if it is to be successful.
The most profitable piece of work can be turned into
a loss if only sufficient time is occupied in the doing
of it. The principles which underlie Government

44 THE TRADE OF TO-MORROW

transactions cannot admit this time factor. The
Government cannot hurry, and this fact alone
ought to be sufficient to keep the Government out
of any trading transactions.

But this chapter wants a postscript, or it might
give an entirely wrong impression. It is intended
to show the danger of trespass by the official beyond
his proper sphere, but it is not intended to imply that
the official is unnecessary or incompetent in connec-
tion with those functions for which he properly
exists.

When trading questions are delegated, as they
will have to be delegated, to expert Trade Councils,
the official will then come into his own. The pro-
cedure of those Councils will require regularising
and co-ordinating, their powers will want definition,
their actions will be improved by criticism, their
accounts will need certifying, their differences will
call for arbitration, their conflicting interests will
have to be reconciled : and in these and many other
ways the Government officials will be busily occu-
pied with matters which they understand fully and
with which they are pre-eminently fitted to deal.

CHAPTER V.

"AUDACITY" IN TRADE.

In a reply to a deputation of the Labour Party,
Mr. Lloyd George said : —

" Audacity is the thing for you. Think out new
ways. Think out new methods. Think out even
new ways of dealing with old problems. Don't
always be thinking of getting back to where you
were before the war. Get a really new world." . . .
" The readier we are to cut away from the past the
better are we likely to succeed." . . . " I believe the
settlement after the war will succeed in proportion
to its audacity."

A mandate from the Prime Minister is thus the
excuse for a few audacious speculations as to the
possibilities of trade. There is a " new world "
to be got in trade, if only we go the right way to
find it.

In the year 1900 the United Kingdom exports
amounted to £354,373,754, or £7 is. 6d. per head of
the population. In 1913 these figures had risen
to £634,820,326, or £13 15s. lod. per head. Thus in
thirteen years, during which time we had developed

45

46 THE TRADE OF TO-MORROW

the practice of restricting output to a fine art, we
succeeded in very nearly doubling our rate of expor-
tation. Further, this was achieved before we had
tackled the problems of production in the serious
way that has been necessary since war began, before
we had added to the ranks of industry the million
or so of additional workers who have since been
discovered, and before we had acquired anything
like an adequate equipment of automatic machinery.

In response to the Prime Minister's request for
audacity it is interesting to figure what would happen
if exports were increased to £100 per head of the
population. This may seem to be aiming too high,
but it is not an altogether impossible suggestion,
as many practical readers, readers who have
acquaintance with the little that is done to develop
export trade in most directions, will agree.

If exports were increased to £100 per head of the
population the total would then be £4,616,875,098
per annum. Now let it be imagined for a moment
that the war could be paid for entirely by exports,
an assumption that is not absolutely true but quite
true enough for our present purpose. In that case,
with exports at £100 per head, we could pay our
war costs twice as rapidly as we had incurred them.
We should soon get " a really new world " that way.
But " audacity " leads us on !

Why should it not be possible to make production
the fashion ? Since 19 14 we have adopted all sorts
of fashions that we never dreamed of before. It is
not only unpatriotic but bad form to dress well,

"AUDACITY" IN TRADE 47

and in this and many other ways we have entirely
reversed our views. Is it then unreasonable to
suggest that when the war is over we should reverse
our views on trade ? Is it unreasonable to ask that
the gentlemen of the future should be those who are
actually engaged in production ? Is it impossible
that we should reverse the social status of the pro-
ducer and the man of leisure ? The moral force of
such an alteration would give us all the desired
results. The readiness with which we have adopted
new views on most matters, in obedience to the
dictates of war, should enable us to take up
new ideas in considering the vital interests of
peace.

There was a time, indeed there is a time, when the
schoolmistress, anxious for the social reputation of
her seminary, made careful inquiries as to whether
a parent was in trade before accepting the child.
Why should the rule not be reversed ? If the
Archbishop of Canterbury, and one or two such
leaders, would invite the schoolmistress in the future
to refuse the children of any parents who were not
connected with some form of production, we should
add a very large slice to the £100 per head of exports
that we have set as our ambition.

As things were constituted in 1914, no trader ever
secured admission to a first-class club, as a trader.
He had to squeeze in as a director of companies,
and he was the more welcome the nearer his direc-
torship approximated to the guinea-pig order. Is
it too much of a revolutionary suggestion that in

48 THE TRADE OF TO-MORROW

view of the nation's crying need for production,
admission to clubs in the future should be on the
distinct understanding that the candidate is engaged
in some useful branch of industrial activity ?

The Vice-Chancellor of the University of Sheffield,
Professor Ripper, has expressed this point in an
ideal way. " Trade and industry," he says, " must
be recognised as the natural, healthful, and normal
means whereby the nation is able to express itself
in useful service. To accomplish this result will
require from each of us, from the highest to the
lowest, our best efforts, and our most devoted
service."

The work of repairing the wastage of war will
require, in addition to a great deal of automatic
machinery, a very much greater deal of alteration
in the fashion with regard to trading matters.

But we have not exhausted the possibilities when
we have induced every fit hand and brain to take a
part in the building up of the nation's industry.
The next step would be an Efficiency Campaign.
Imagine the possibilities of such an agitation if
conducted with half the vigour of the Derby scheme.
Think of Mr. Lloyd George with all his eloquence
leading a campaign for " Empire Efficiency."
'■ There has never yet in this country," says Mr.
Charles Lancaster, " been any public agitation for
greater national efficiency. Men who have been
called captains of industry have now and then
appeared, and will appear again, but no great man
can by his personal management compete in results

"AUDACITY" IN TRADE 49

with a number of ordinary men who have been
properly organised so as efficiently to co-operate."
The same writer makes the interesting suggestion
that trade associations should be called efficiency
societies. There is already the Bradford Business
Science Club, a capital little body of keen men who
meet weekly to discuss questions of efficiency. I
need not elaborate this point.

We are getting on with our £100 per head of the
population. Increased machinery, the abolition of
limitation, production as a fashion, coupled with an
Efficiency Campaign, all help us to see that the
figures we were bold enough to suggest are not so
impossible after all. But there are other things
that yet remain to be done. The elimination of
waste is a subject all to itself, full of really gigantic
possibilities. The authors of " Eclipse and
Empire " state it as their opinion that by means of
the saving of waste and the invention of new methods
and materials, the whole of the expenses of this
great war could be defrayed in one generation.

So far we have proceeded to build up the industrial
revival that is required from outside, by creating a
different atmosphere, a different standard of opinion,
on the subject of trade and industry. But there is
other work to do before we shall reach our ambition
of paying for the war in a couple of years.

Such business brains as we possess are to-day
chiefly devoted to the welfare of individual firms
or companies. The managers of a shipbuilding
company, or a chemical concern, or an agricultural

D

5o THE TRADE OF TO-MORROW

implement house, are engaged primarily on the well-
being of that house. A very large proportion of
their energies is devoted to competition with other
houses, and as a result there is overlapping and can-
cellation of effort to an alarming extent.

A very great step forward towards our £100 per
head and our " new world " would be made on the
day when we agreed to take our trades one at a
time, trade by trade, and study them as whole
trades. There are very few of our minor industries
whose output could not be doubled if the men
engaged in them were to work together instead of
against one another. Production of large varieties
of small quantities such as is the rule in England
to-day, would give way to production of limited
varieties in big quantities. This side of the subject
is dealt with more fully elsewhere and need, therefore,
only be mentioned here. It is, however, beyond
dispute that there is room for immense expansion
in the output of each of our industries if it were
possible to treat each of them as one single unit
and organise it properly.

This brings us to the difficult problem of the
Nation's interest in trade. In order to pay for the
war in the limited time that Mr. Lloyd George's
" audacity " has tempted us to suggest, it will be
necessary for the Government to take a very
different view of its responsibilities to industry.
Hitherto the theory has been that when the Govern-
ment has issued a few regulations as to guards for
machinery and fire precautions or set up a wages

"AUDACITY" IN TRADE 51

board, its duty to trade is at an end. In future the
Government will have to take a much more active
interest in the promotion of trade. We cannot again
allow whole industries to disappear simply be-
cause capitalists find a more remunerative means of
employing their money, or workmen go on strike.
It must be part of the duty of the Government to
see that each industry which can profitably and
properly be carried on in these islands is established
on a firm and lasting basis and exploited to its fullest
extent.

This question of the relations between the Govern-
ment and trade is the matter with which this book
is chiefly concerned, and is the most difficult of all
the problems connected with Reconstruction. If
the possibilities of trade are to be realised to their
fullest extent it is obvious that Government help
and encouragement must be forthcoming. Govern-
ment Departments must realise that to set up in
competition with an established industry is not the
best way to encourage that industry to develop
itself.

Mr. Ritchie's Local Government Act of 1889 gave
new life to our Counties, Towns, and Cities. It is
not too much to say that it was the basis upon which
the London, the Birmingham, and the Glasgow of
to-day have been built. Modern systems of sani-
tation, locomotion, town planning, and education,
have not been brought to their present state of
efficiency by the activities of officials in Whitehall.
The tremendous strides that have been made in

52 THE TRADE OF TO-MORROW

these matters within the last five and twenty years
have been entirely due to a policy of devolution and
the conferring of adequate powers upon local
authorities, with the result that a live civic spirit
has been cultivated.

In exactly the same way the full development of
industry will never be attained by the dabbling of
doctrinaires in Westminster in all sorts of doubtful
trading speculations. But if the Government will
create for each industry an authority elected upon
a proper basis and modelled upon our excellent local
authorities, then the life and well-being, prosperity,
and expansion of each industry are assured.

To carry out this suggestion would amount to
the endowment of Trade Councils with statutory
powers, and the placing upon these Councils the
responsibility for the welfare of the industries which
they represent. A useful thought in this connection
is furnished by the New Statesman Supplement on
Professional Associations. " It should, we think,
be a matter of professional honour for the collective
organisation of each profession to see to it, not
merely that its members are well qualified and
properly remunerated, but also that the service of
the profession is supplied in adequate quantity for
the needs of the community, not only the rich hut
also the poor." The New Statesman is dealing
with professional associations : the argument applies
with equal force to trade associations.

If, therefore, we could add to the other minor
revolutions that we have suggested, the setting up

"AUDACITY" IN TRADE 53

of a statutory authority in every industry to
encourage and organise the efforts of those engaged
in that industry, another great advance towards the
£100 per head would have been made. " We
want to think in larger multiples," says Mr. Fisher,
Minister of Education. " Our business ought to be
organised on a larger scale and with more science.
Until we get into the habit of thinking on a larger
scale, both with regard to the organisation of busi-
ness and the scientific equipment which should
serve those businesses, we are not in a fair way to
achieve any very great results in applied science."

Last, and by no means least, we must get rid of
the small mind, especially the small mind in big
places. That is one of the greatest dangers which
confront the nation at the present moment. We
have too many small-minded faddists in all these
new Government Departments and Directorates,
and the fear is that some of these people, having
secured the ear of those in authority, may induce
the State to embark upon silly small schemes,
schemes which are not within the province of the
State and which cannot be properly understood in
Whitehall.

The small mind is useful enough in its way, but
it must not be tolerated at the centre of Govern-
ment. The establishment of a system of devolu-
tion for industry, the setting up of Trade Councils
in every industry, the confining of the thought and
effort of Government to the principles of governing,
will leave plenty of scope for all these faddists to

54 THE TRADE OF TO-MORROW

put their schemes before the practical men who will
be found upon the numerous Trade Councils.

A new vista will appear when once the principle
of national interest in trade is admitted, and
undreamed-of possibilities will come to light when
we begin the study of whole trades, one trade at a
time.

But to come back to Mr. Lloyd George and
audacity. One is tempted to express all sorts of
dreams which, although they may be dreams, are not
so unpractical as they appear. The trade of the future
is charged with the duty of providing the world
with the best of everything. There is no end to its
opportunities and no limit to its possibilities. For
instance, the work of giving every man, woman,
and child in these islands the opportunity for a
warm bath every day, expressed in terms of trade,
represents an order for about one hundred million
pounds' worth of goods. If similar advantages could
be extended to the Western Hemisphere alone, to say
nothing of the whole globe, it would mean in terms
of trade unending employment to the masters and
men engaged in the manufacture of baths and hot-
water apparatus. But the hot bath is by no means
the height of ambition as present-day ideas run.
Everybody wants a more frequent change of linen,
more furniture, more variety of food, more amuse-
ments, more recreation, more books, more light
and heat, more of every imaginable amenity of life.
And the satisfaction of these needs represents enough
work to keep us all engaged, with the assistance of

"AUDACITY" IN TRADE 55

the best machinery, for generations to come. And
then, before these requirements are one-tenth filled,
many new needs will have arisen. In fact, demand
will always be ahead of supply if only the right
ideas are kept uppermost in mind.

In considering the possibilities of trade expansion,
we have confined our remarks to the paltry ambi-
tion of £100 per head in exports, but we hesitated
at the beginning of these notes for fear of giving
too great a shock to the reader. We dare now to go
beyond that aspiration. The £100 per head is not
a sufficiently ambitious mark to set before ourselves.

The last Census of Production proved that the
net output per workman employed in factories in
Great Britain amounted to £102. In that simple
fact one discovers the reason for the limitation that
has to be placed upon the earnings of the industrial
classes. For if the workman were to succeed by
agitation in securing the whole of the £102 which
he produced, he would not then have reached any-
where near the point which he had set himself as
his standard of comfort.

Let us assume therefore, in the audacious mood
which we have adopted for the purpose of these
notes, that, by making production fashionable, you
have doubled the number of producing hands :
and then add to these sufficient automatic and
labour-saving machinery to make the output £500
per worker. If these two assumptions are not
impossible you would increase our output, our pro-
duction, our real wealth as a nation, ten times.

56 THE TRADE OF TO-MORROW

This is undoubtedly overstating the case, but we
plead Mr. Lloyd George's " audacity."

It must not, therefore, be assumed that we can
exhaust the possibilities of trade by means of an
increase in exports alone. The field for develop-
ment in home trade, home consumption, and there-
fore home comfort, is equally inexhaustible.

The elected Trade Councils would, of course, be
concerned with quality as well as quantity ; the
two things must go together. They would give
full scope for the forces of art and science to make
themselves felt in our industries. These forces are
largely ineffective to-day, owing to the absence of
that collective and co-operative spirit upon which
they both so largely depend.

CHAPTER VI.

THE THIRD PARTNER.

Next to the war, our trade is the question which
should be uppermost in our minds. The well-
being of our industries is the foundation upon which
every other form of national life depends. The
success of British trade in the past has been one of
our greatest achievements. We have always led
the world of commerce, and so far no rivals have
succeeded in taking that position from us. But
the war has called a halt, and given us time to review
our position, and we have now discovered that
competition is much stronger than we had realised.
The war has done something else — it has made us
poorer, it has created a necessity for a great
increase in our trade, and has brought about a
situation where new methods, new ideas and
drastic alterations have become essential.

In these circumstances it is natural that all sorts
of plans should be produced and pushed, and from
out-and-out Utopians downwards schemes are being
advanced by the dozen.

Mr. H. G. Wells wants to do away with " the little
57

58 THE TRADE OF TO-MORROW

man in the office " ; Sir Leo Chiozza Money wants
to turn the State into a wholesale grocer ; Mr.
Sidney Webb stands for nationalisation ; Mr.
Lloyd George, armed with Defence of the Realm
Acts, starts the State upon a career as " the largest
firm on earth," running anything from public-houses
to shipyards ; Mr. Hughes is determined that not
one tiny rootlet of the upas tree of German trade
shall remain ; and so on.

Conferences are held ; Royal Commissions and
Departmental Committees spring up like mush-
rooms ; every few minutes another Chamber of
Commerce or other self-appointed and unrepresenta-
tive body comes into being ; Trade Unions pass
resolutions ; and the ordinary human mind is
staggered with the welter and chaos of it all.

The outstanding problems are as numerous as
they are varied. The capture of German trade,
the. trebling of our revenue, the employment of our
soldiers, the cheapening of production, the increase
of output, the development of the resources of the
Empire, the improvement of the general standard
of living, are some of the leading questions. There
is in all conscience enough to do, and the question
which is in the minds of most of the thinkers on
these matters is, " What part should the State take
in all these movements ? "

William Whiteley, the pioneer of the multiple
department business in this country, succeeded
because he declined to dabble in detail ; he dele-
gated responsibility, he put experts in every depart-

THE THIRD PARTNER 59

ment and left it to them ; he contented himself with
the work of supervising. The British Empire may
be likened to a great multiple department concern,
and the Whiteley principle — the expert and delega-
tion— is the only basis upon which it can be success-
fully managed. The one necessity to Whiteley
was turnover, and the one necessity to the Empire
is output.

The position of the State in relation to industry
may be likened to that of a debenture holder in a
trade corporation. The debenture holder is in
fact the supreme authority and exercises a benefi-
cent influence over the Company's operations :
and yet, in the ordinary way and so long as things
go well, he takes no part in the active working of
the business of the Company. A debenture holder
in a Limited Company is not even privileged to
vote at its Annual General Meeting. He is seldom
represented on the Board. His interests are watched
over by Trustees, whose duties in the case of a
successful enterprise are purely nominal. But if
things go wrong, if there is any fear of dangerous
competition damaging the Company's security,
or any reason to suppose that things are not as they
should be, then the debenture holders appoint a
Receiver, and the Directors, Managers, Shareholders,
and others have to bow to his authority.

There are really three parties interested, deeply
interested, in the prosperity of each industry :
(1) The State, (2) Labour, (3) Capital. These three
parties should be in partnership for the purpose of

60 THE TRADE OF TO-MORROW

promoting the welfare of each trade. The partner-
ship might well be compared to the constitution of
a Limited Company, in which the position of the
debenture holder was occupied by the State, the
position of the preference shareholder by Labour,
and that of the ordinary shareholder by Capital.

In considering the relations of the Government to
trade and industry, it may be convenient to inquire
what it is that the nation wants from trade. This
simple question has in the past been confused with
side issues which have almost entirely monopolised
the discussion. We have got into the habit of
giving the whole of our mind to problems like Free
Trade and Protection, or Work and Wages, and it
seems to me that we have now to go back a little and
consider the primary interests of the nation in
industry.

If we take the Boot Trade as an example, and look
at it from a national point of view, we find a few
hundred so-called masters representing a few millions
of capital at present in control of the trade. Next
there is a much larger body of managers, salesmen,
accountants, travellers, shippers, and wholesale
and retail shopkeepers. Last and most important,
there is an army of operatives engaged in the actual
work of manufacturing boots.

Looking at the matter from the national point
of view only, and ignoring for the moment the
interests of the trade, the best thing that can happen
is that the maximum quantity of the best boots
should be produced, that the proportion of boots

THE THIRD PARTNER 61

to population should be high, that the largest
possible number of pairs of boots should be sent
abroad. That, it seems to me, is the national point
of view.

Next we arrive at a number of secondary considera-
tions such as foreign competition, involving ques-
tions like tariffs, and wages, and profits, which are
domestic questions as between the different persons
who go to make up the Boot Trade. But the first
essential is the production of the maximum quantity,
and adequate arrangements for the disposal of that
production, a problem which so far as I am aware
has never attracted the interest of the politician
or of the Government.

A further study of the boot industry will show
that the small body of masters who control the
capital and are in command of the trade are able
to stop production altogether if it suits their financial
interests to do so. On the other hand, the opera-
tives, well organised in trade unions, possess to-day
the power to call a strike and inflict harm not only
upon the Boot Trade but upon the nation.

Or again, the price of money or the opportunities
for investment may so alter as to make it worth
the while of the capitalists interested in boots to
take their capital away, thereby throwing the opera-
tives out of work, robbing the nation of its boot
trade, and sending the industry, lock, stock, and
barrel, to Germany or America.

This sort of thing has happened many times.
There is no authority which can watch the national

62 THE TRADE OF TO-MORROW

interests in these matters. The British Boot Trade
to-day depends upon the accident that a certain
number of capitalists, managers, and workpeople,
in their own discretion, think it worth their while
to engage in the manufacture of boots.

" We all know that no Government before the
war thought for a moment that the magnitude of
our iron and steel industry was a subject in which
the theory of government was concerned, and we
are paying now for the old neglect."

" Let us suppose that a well-equipped Ministry
of Commerce, collecting continuously accurate
records of progress in every industry, possessed
the practical means of making prompt and direct
representations to the members of any trade. Let
us imagine also that it was found that an important
trade was becoming stagnant, as our iron industry
became stagnant before the war. The Ministry of
Commerce would make it its business to call the
iron trade association together, and to discuss the
whole situation with its members. If it failed to
secure from the trade the assurance of progress, and
if the national interest demanded a larger output, as
it most certainly did in the particular case referred to,
it would become the duty of the Minister of Com-
merce to devise means to enlarge the production,
whether by way of stimulating the supply of capital,
or otherwise."1

Does it not become evident that the duty of the

1 Sir Leo Chiozza Money, Eztning News, July 24th, 1916.

THE THIRD PARTNER 63

Government, as part of the process of governing,
is to make such arrangements that this nation shall
occupy a proper place in every sphere of trade ?
If the Government were to insist upon some form of
organisation which would give to every manufacturer
and every workman the opportunity of being repre-
sented, it could spend public money in the develop-
ment of an industry, and that money would be
spent on interests which are truly national. I sub-
mit that the maintenance of output in every trade
is a proper matter for the consideration of the
Government.

The work of the Government in assisting industry
should take the form of organisation, direction or
control, rather than of direct Government interven-
tion in actual trading transactions. The business
of Imperial Parliament is not to do things, but to
set up the proper authority in every branch of
national activity. We must never forget the com-
plicated nature of trade and industry, the inter-
dependence of one branch upon another, the necessity
for all sorts of middlemen, speculators and agents.
In working this complicated machine every part
reacts upon the other parts, and when the Govern-
ment goes out of its way to dabble in trade it always
finds that it is involved in difficult complications.
The Government should encourage the activities
of traders and not attempt to compete with them.

There is a general outcry at the present moment
for Government assistance in connection with
trade. The commonest form that this demand

64 THE TRADE OF TO-MORROW

takes is a call for a Minister of Commerce. The
answer of the Government to this outcry is the
appointment of great numbers of little Committees,
all lacking in representative character or authority,
and each attempting to deal with some little detail.

" We are going about the business of our national
future like a family which is acquiring an auto-
mobile, by sending father out to get some sort of
good engine, it doesn't matter what, mother to
back her fancy in carburettors, Frankie to get
acetylene headlights, Bertie to buy wheels, and
Georgie to buy tyres, regardless of each other
and the weight and size of the whole, leaving the
rest of the equipage to happen somehow, while
sister Beatrice sits at home inquiring into the re-
spective merits of the petrol and the steam engine,
and Caroline looks through the accounts to find out
whether the family can afford to set up a car of
any sort at all.

" Economic reconstruction must be a general
act. It is an idle dream, and all too prevalent
a dream, to suppose that any great economic
reorganisation can be brought about by quiet
meetings of bankers and big business men and
unobtrusive bargains with Government depart-
ments."1

Our trade and commerce is the only part of our
national life which is not organised upon a represen-
tative basis. There are vast stores of energy,
ability, and genius in business, half of which is

1 " Elements of Reconstruction."

THE THIRD PARTNER 65

now wasted owing to lack of cohesion and organisa-
tion. The Government must deal with trade in a
much bigger way. It must learn to think in hun-
dreds of millions and ignore details. It should
not dabble in trade any more than it dabbles in
local affairs. Its true function is to set up proper
authorities in each trade, just as proper authorities
are set up in each locality. In trading matters
the Government ought to prescribe and not dis-
pense.

A glance at the history of Local Government will
help the argument. In the eighteenth century,
when the inhabitants of any district wanted to
pave the streets or to make any local improve-
ment, they formed a society and shared the cost
voluntarily among the members. These voluntary
societies gradually transformed themselves, generally
by special Acts of Parliament, into various bodies
of Road or Harbour or Street or Lighting Com-
missioners, which levied compulsory rates, and
acted in the name, not of this or that exclusive
group, but of all the local residents.

It will thus be seen that in trading matters
we are in the same position a? we were in the
eighteenth century in matters of local government.
We have our voluntary associations struggling
with the impossible task of organising our trades :
impossible, because these organisations have no
authority, are not representative, in fact, in most
cases have no legal status. They do the best
they can in the same way that the voluntary

E

66 THE TRADE OF TO-MORROW

bodies attempted to tackle the problems of local
sanitation. The possibilities for improvement in
our trading position by the proper application of
Government help, are as great to-day as they were
two centuries ago in improving our local adminis-
tration.

If the Government would give up all the many
ways in which it is playing at trade, and give
the advantage of its recognition to properly con-
stituted councils of industry, our position would
be immeasurably strengthened.

I have already dipped into the fund of suggestions
contained in the letters to The Times, on the
" Elements of Reconstruction," but the ideas of
these authors are so pertinent to our subject that
they must be mentioned. They go a good deal
farther than I am prepared to go, and challenge
the constitution of Imperial Parliament itself.
They call attention to the fact that we have on
the one hand representatives of such places as
Croydon or Hampstead or Battersea, whose in-
habitants have scarcely anything in common
except a postal address, and that, on the other
hand, if we want to deal in any satisfactory way
with the transport workers or railway servants
or medical men or electrical engineers, we have
to go outside the formal constitution altogether
and discuss matters with trade and professional
organisations that have neither legislative nor
administrative power, that may not represent the
entire profession or industry concerned, and that

THE THIRD PARTNER 67

are often mere organisations for restricting work
and raising wages, without any tradition or sense
of public function.

They suggest that the shortest way to economic
reorganisation may lie in lifting most of the tasks
out of the scope of the Legislature altogether, in
largely increasing the powers and scope and respon-
sibilities of the great labour organisations, in bring-
ing both them and the national councils of the
employers and proprietors of the great industries
into the structure of the Constitution, in insisting
upon joint conferences and joint action, and in
leaving Parliament little more than the power to
endorse or veto the outcome of these joint delibera-
tions.

I am not prepared to follow these writers in
their larger criticism of Imperial Parliament. It
is very necessary, in my judgment, that Members
of Parliament should be as free as possible from
direct connection with any interests, and if the
principle of representation of districts has lost
its original meaning, I should rejoice to think that
our legislators were to that extent more free from
local or particular prejudice. Parliament has a
great deal to do apart altogether from trade and
commerce, and, for my part, I should be quite pre-
pared to leave it alone if only it would consent to
leave trade details alone, and to delegate its powers
in these matters to properly constituted authorities.

Such help as the Government now gives to trade
is open to the objection that it involves the spending

68 THE TRADE OF TO-MORROW

of public money for the furtherance of private
interests. If those private interests were merged
into national interests, public money could be
freely spent, and certainly it will have to be spent
in very large amounts, on the promotion and main-
tenance of our trade and commerce.

Government help in trading matters, as at present
given, is open to the further objection that it is
generally the result of personal influence. If the
Government think it wise to spend money upon
education or research or anything else, in connection
with boots or leather, that money ought to be
spent upon the advice arid with the assistance of
the properly elected representatives of the boot
industry, and not at the request of some Member
of Parliament who happens to be interested and
to have the ear of one of the Government
Departments.

There is the further objection about the present
haphazard method, that when the Government
comes to the aid of a small body of traders, there
is generally another body of similar traders who
feel aggrieved that they have not shared in the
benefits secured.

The setting up of properly constituted public
authorities in each industry would greatly facili-
tate the work of the Government in promoting
our trade. There would be an end of all the hole-
and-corner private arrangements which are the
cause of so much trouble and discussion

Whatever reorganisation is attempted ought

THE THIRD PARTNER 69

to be done in the daylight. It ought to be done in
such a way as to inspire confidence. It ought to
be free from any of the abuses of nomination or
influence. I have the greatest respect for a Mem-
ber of Parliament, but a Member of Parliament
is very seldom a representative trader. He is
not as a rule identified with the interests of any
particular trade ; if he is he ought not to be. His
duty is to watch the interests of all trades and of
the nation as a whole. What does the honourable
member for, say, the Whitechapel Division of the
Tower Hamlets, as such, know about the cotton
trade ? To put upon the representative of White-
chapel the work of arranging cotton matters
seems very like delegating to churchwardens the
task of compiling railway time-tables.

Apart from the numerous activities of the Govern-
ment in connection with different branches of
industry, the Government professes to render
assistance to trade through the Consular Service,
and such institutions as the Commercial Intelligence
Branch of the Board of Trade. The latter is so
small, and its activities are so minute, that it has
escaped much criticism, but the Consular Service
has for years been the butt of writers on trading
matters. The trouble with these institutions
arises from a failure to understand the first prin-
ciples of trade. The only possible way to deal with
the trading problem is, as I have already said two
or three times, to take it trade by trade, one trade
at a time.

70 THE TRADE OF TO-MORROW

The stupid idea that some unfortunate official,
sent at the public expense to a distant part of the
world, can be of any real assistance to all the varied
interests covered by British commerce, requires
to be abandoned. The Consul, especially in a
foreign State, is there for the purpose of attending
to the formalities connected with passports, bills
of lading, registration of births, deaths, and
marriages, and other similar details. It is quite
erroneous to suppose that he can do anything
worth the name in the promotion of British trade.

The failure of the Commercial Intelligence
Branch to give commercial intelligence that is
worth having is now admitted in the announce-
ment that was made last November, that any in-
quiries for information of importance will be sent
to the Imperial Institute, while the Commercial
Intelligence Branch will continue as heretofore to
give immediate replies to any inquiries for goods
that are well known or easily obtainable. If every
trade were properly organised, each would have
its own commercial intelligence branch, staffed
by men who understand the trade and who alone
are able to collect such intelligence as is wanted
by each particular industry.

The relations of the Government to trade want
putting upon an entirely new basis. A new national
organisation should therefore be established which
will retain all the sterling qualities of our present
system, and add to them the necessary force to
ensure greater activity.

THE THIRD PARTNER 71

' The improved organisation that is now sug-
gested would contain nothing that is new or un-
tried. It would consist of natural developments
of what already exists. Employers and work
people have organised themselves into associations
and unions ; some of these have developed federa-
tions of similar or even of unconnected interests,
and both parties have their national congresses,
or at any rate, the germ of them. The demand
now is that the organisations already in existence
be perfected."1

In considering the possibilities of a connection
between the State and trade, the question of in-
itiative arises. I am frequently told that the first
step should come from the trades themselves, that
there ought to be a general demand on the part of
the trade unions and associations for Government
recognition and help. I believe that the initiative
must come from the Government. Manufacturers
are interested in prices, workpeople are interested
in wages, and both have done a great deal to pro-
mote their respective objects. I suggest that there
is a more important interest in trade than either
of these two, the interest of the nation, and that
the nation as Third Partner should take active
steps to promote that interest.

1 Professor Kirkaldy.

CHAPTER VII.

GETTING RID OF SHIBBOLETHS.

" The readier we are to cut away from the past,
the better are we likely to succeed," says Mr.
Lloyd George ; and in attempting to study the
question of trade it seems to me that one of the
first things to do is to clear the mind of several
old ideas. August, 1914, marked the end of the
trading world as we knew it. Certainly in matters
like money or production, the terms and figures
with which we were familiar are now useless.
We are already doing all sorts of things which a
couple of years ago would have been scouted as
impossible. I remember a conversation with a
financier in the autumn of 1914, who gave me the
comforting assurance that the war must come to
an end in the first few months of 1915, for the simple
reason that by that time all the available money
would have been used up. Since those days we
have all learnt that there is no such thing as money :
it turns out to be nothing but a lot of book entries
in a bank. A Government which within the re-

72

GETTING RID OF SHIBBOLETHS 73

collection of each of us was content with £90,000,000
a year, now spends nearly £3,000,000,000 a year ; the
ammunition which was sufficient to carry through
the whole of the South African War is now used
up in a few days, and everything is altering in the
same sort of proportion.

Does it not, therefore, become needful to recog-
nise that old arguments, old theories, and old
standards do not necessarily apply to the present
or the future ?

We have for generations occupied ourselves with
discussions on work and wages. I submit that
that subject now becomes a comparatively minor
issue. We are face to face with the much greater
question of our very existence as a trading nation.
The problem to-day is not only the distribution of
wealth, but, even more important, the actual
making of wealth. Writing in 1843, Carlyle de-
clared : —

' This largest of questions, this question of work
and wages, which ought, had we heeded Heaven's
voice, to have begun a generation ago or more,
cannot be delayed longer without hearing earth's
voice."

For over seventy years we have continued " this
largest of questions, this question of work and
wages," and if one is to believe some of the debaters
on the matter, very little progress has been made
with it.

I think that most of the discussions on this
subject in the past have missed the real point.

74 THE TRADE OF TO-MORROW

Too many students of economics have a way of
dealing with money or with goods as if they were
fixed quantities, and for seventy years they have
argued about the possession of these supposed fixed
quantities, with the result that we are still in the
stage that Carlyle had reached in 1843. Far too
little attention has been paid to the question of
Production.

Wages and profits are one and the same thing.
There should be no antagonism between them :
they are wrongly conceived as robbing one another.
They both depend upon output and organisation.

Perhaps, before proceeding further, it would be
well to define the scope of our inquiry into trade,
to define what we mean by trade and com-
merce. Some people, especially politicians, are
inclined to think that when they deal with railways,
shipping, insurance, banking, weights and measures,
bankruptcy laws, patents, trade marks, and various
other general commercial questions, they are dealing
with trade. But these things, although of the
utmost importance, are really only incidents of
trade, by which term we shall mean the selling and
making of goods.

Note the order in which I place these two
functions. The law of supply and demand re-
quires first a demand and then a supply, but
the word " demand " used in this connection is,
I think, unfortunate. It is at least open to a good
deal of misconception. There is room for a new
branch of economics which would recognise that

GETTING RID OF SHIBBOLETHS 75

the problems of selling rival in importance the
problems of production. This point has a vital
bearing on many questions. The limitation of
output by Trade Unions was justified by the fear
of a glut due to inability to dispose of the work
produced. A glut of manufactured articles is
only possible where there is failure in the selling
part of the organisation.

To bring the law of supply and demand right
down to modern conditions, one example will
suffice — the American typewriter. If you will
take your minds back to the days when the American
typewriter manufacturers were attempting to in-
troduce their wares into this country, you will
remember that they were received with small
favour. The most aggressive advertising, the most
elaborate selling schemes, armies of travellers,
machines on free trial, and all sorts of devices, were
adopted to persuade the conservative Britisher
that it was desirable or advisable to use a machine
for the purpose of writing. Less than twenty
years have been sufficient so to alter the position,
that the trader who declines to use the typewriter
cannot even get his correspondence read.

Now if the American had accepted the usual
British interpretation of the law of supply and
demand, this country would be without its type-
writers to-day ; but the people at the back of that
movement recognised that that law was not only
concerned, with some urgent demand which existed
by nature, but that it was possible to create a

76 THE TRADE OF TO-MORROW

demand and then provide the supply. We have
to stretch our imagination to the day when every
Chinee will be on the 'phone, every Patagonian
baby will need a perambulator, and every Zulu a
motor-bicycle. The interest of the State in trade
is that we should supply such goods instead of the
German, the American or the Japanese, and the
question for the State to answer is, "How are
these things to be done, and who are the people
to do them ? "

There is one other old idea that wants careful
examination. If one is to believe the newspapers,
we are all engaged in giving up old shibboleths,
discarding old fetishes, and I think that the fetish
of the consumer has had its day. There is some-
thing which appeals to the soul of an economist in
the consumer, while the poor producer is almost
invariably a rogue. Surely, judged by national
values, the producer is more important than the
consumer. I have great hopes that the experience
of the last couple of years will have enabled us to
form an entirely different conception of the respec-
tive positions of the producer and the consumer.
In the supposed interest of the consumer, we have
as a nation done everything that was possible to
discourage, thwart, hamper, and, indeed, abuse
the producer. I suggest that there is a subject
here which might be re-stated with advantage,
and it might be possible to show that the true line
of economy, the line of the greatest good, and the
line of real cheapness, is along the road of en-

GETTING RID OF SHIBBOLETHS 77

couragement for the producer and comparative
disregard of the consumer.

The attitude of the past has been an attitude of
antagonism to every form of trade association or
any attempt on the part of manufacturers to com-
bine or co-operate, while nothing but blessings have
been poured upon the head of everything in the
nature of an association of consumers, co-operative
societies, and the like.

Then there is the question of the State's interest
in industry. The professors who have provided us
with the literature of economics pay all too little
attention to this side of the subject. The distri-
bution of wealth has filled columns : the creation
of wealth inches.

It seems to be nobody's business to inquire why
typewriters should all be made in America, or (until
the war) optical glass in Germany. Our industries
have come to us by accident, not as a result of any
effort on the part of the State. A local authority
is set up to see that the infant mortality rate of
Guildford is kept low, but no authority exists to
regulate the death-rate in the fancy leather trade.
The public police force sees to it that we do not
steal each other's watches, but if the Japanese
steal our best-known trade marks and thus filch
our Indian customers, the nation takes no cognisance
of the matter. The nation insures the working man
against influenza but does nothing to insure his
means of livelihood against German Cartels or
American Trusts.

78 THE TRADE OF TO-MORROW

Official Trade Councils will provide the State with
the means to guard and secure the national interest
in industrial prosperity.

To recapitulate these five points. First, we have
to start thinking in terms and quantities which are
entirely new. Second, the problem is not only a
question of work and wages but of our national
existence ; not only the distribution, but the crea-
tion, of wealth. Third, we have to recognise that
of equal importance to supplying the demand is
the work of making the demand. Fourth, the
relative national values of consumer and producer
may require to be reconsidered. Lastly, there is a
State interest in trade which has not hitherto been
recognised.

CHAPTER VIII.

THE OUTCRY FOR ORGANISATION.

Within the last few years there has arisen from every
quarter a demand for organisation. Many years
ago John Stuart Mill said : —

" The peculiar characteristic of civilised beings is the
capacity of co-operation ; and this tends to improve by
practice and becomes capable of assuming a constantly
wider sphere of action."

The subject was made fashionable in August last,
by Mr. Asquith, who, speaking in the House of
Commons, laid particular emphasis on the develop-
ment of trade associations for common action at
home and abroad and for raising the average
standard of production.

" The speculation of the time," says Professor MacGregor,
" is round the problem how far or how much farther the
method of industrial grouping and the aspirations of
associated life can be carried. While at the beginning
of the century the problem was to find a hearing for the

79

8o THE TRADE OF TO-MORROW

advocates of combination, at the end of it the problem
of legislators and teachers is to guide the movement.

" Since it is evident that many of these defects of in-
dustrial competition are due to separateness of organisa-
tion and policy, it is a matter of course that combination
or a further degree of combination is necessary to their
remedy. . . . Any common government of this kind will
tend to prevent not only those depressions which come
from over-trading under the influence of competition and
risk, but also those forms of panic that are due rather to
the fear of bad market conditions than to actual conditions."1

The authors of " The Elements of Recon-
struction " say : —

" The ruling idea to adopt in our national policy,
the idea about which the rest of our policy can be
built as a body is built upon a backbone, is the idea of
national syndication, the idea of grouping and amalga-
mating our industries, our food supply, and our labour
organisation, upon a national scale. Only upon those
lines can we hope to make our industries scientific and
progressive, defeat foreign competition, secure a satis-
factory home food supply, and come to an understanding
and keep the peace with labour. The alternative to such
a reconstruction boldly and openly planned and carried
through, is decadence and Imperial disintegration. . . .

" Our view is that these great economic syndications
upon a national scale, which is the only possible means
of saving and developing the British Empire against the
dangers and competition which threaten it, must be settled
and can only be settled with the understanding, participa-

1 " The Evolution of Industry."

THE OUTCRY FOR ORGANISATION 81

tion and consent of both labour on the one hand, and the
existing proprietors, directors, and managers concerned
in these economic systems on the other. It is absurd to
suppose any sudden and violent change of system in these
things ; the arrangements of yesterday are the only
possible material we have for the arrangements of to-
morrow. We want to see labour inspired and stimulated
by our new sense of common needs, in conference with
capital, quickened by a sense of extreme national danger,
upon these great constructive projects."

Lord Milner, in an Introduction to these letters,
says : —

" We seem to be more than ever in need of a synthesis,
of some unifying principle, else we may easily find our-
selves pursuing a number of ends which, though perhaps
individually commendable, are incompatible with one
another. . . . From the heart of the business world
itself come the most urgent warnings against excessive
unregulated competition and the loudest appeals for
organisation on co-operative lines and for the helping
hand of the State."

Mr. Harold Cox, in an address to the Institute of
Civil Engineers, declares : —

" Just as we cannot afford to leave to individual enter-
prise the defence of our country against war, so we cannot
trust to individual enterprise alone to solve the industrial
problems that will follow the establishment of peace.
There must be some kind of collective effort to deal with
problems of such magnitude as these will prove themselves
to be."

82 THE TRADE OF TO-MORROW

Sir William McCormick, in his Report upon the
work of the Advisory Council, says : —

" We wish to point out that there are specially strong
reasons for more co-operation between the various British
firms in each industry and between the industries and the
State in the furtherance of research. . . . Organisation
can only be fought by counter organisation, and so long
as the Englishman treats his business house as his business
castle, adding to its original plan here and there as necessity
or inclination directs, with his hand against the hand of
every other baron in his trade, and no personal interest
in the foreign politics of his industry as a whole, it will be
as impossible for the State to save him, whether by research
or other means, as it would have been for King Stephen
to conduct a campaign abroad. In the main the State
can only effectively help those who help themselves. . . .

" We think it possible that the voluntary efforts of
manufacturers in friendly union which enabled the problem
of munitions to be rapidly solved, may lead to a new kind
of reciprocity between firms which will avoid the evils
both of monopoly and of individualism. . . . The forces
which are at work in this direction have elsewhere found
their expression in connection with the Trust and the
Combine, but we believe if the real nature of these forces
is clearly grasped that it will be possible to organise them
for the benefit not only of the industries but of the nation
as a whole."

One could multiply indefinitely quotations of
this kind, but the following short selection will
suffice to show how the same idea is running through
many brains — brains which, it will be noted from

THE OUTCRY FOR ORGANISATION 83

the names given, do not always or often think in
the same direction.

The late Lord Mayor (Sir Charles Wakefield),
at a Meeting of the Engineering Industry at the
Mansion House on September 20th, 1916 : —

" How to make the most effective economic use of this
great group of industries, capable of affording well-paid
employment for two million workers, is not merely a
question for company directors and trade union officials ;
it is a national and an Imperial duty and responsibility."

Dr. William Garnett, in an article on British
Trade and Applied Science in the Daily Telegraph,
on January 19th, 1916 : —

" What machinery have we for the organisation of
British Industry capable of dealing with all the separate
trades, and especially with those problems wherein two
or more trades have a common interest, or would have
if they realised their true relationship ? ... Cannot
such an organisation be created by British Industries in
the interest of British Industry ? "

Sir Joseph Compton-Rickett, in the Contemporary
Review, May, 1916 : —

" Hitherto our national trade has been left to the enter-
prise of individuals. They have not had the means at
their disposal for determining over-production or under-
production. ... It is only the Government of a country
which can efficiently survey the entire field of operation,
and so co-ordinate the efforts of the commercial world."

84 THE TRADE OF TO-MORROW

Mr. W. N. Hughes, Prime Minister of Australia : —

" Let us, resolutely putting aside all considerations of
party, class, and doctrine, without delay proceed to devise
a policy for the British Empire, a policy which shall cover
every phase of our national, economic, and social life ;
which shall develop the tremendous resources and yet
be compatible with those ideals of liberty and justice for
which the men of our race now, in this, the greatest of all
wars, are fighting and dying in a fashion worthy of their
breeding."

Sir Algernon Firth, President of the Association
of Chambers of Commerce, in The Times Trade
Supplement," April, 1916 : —

" We have had no constructive Imperial policy with
regard to trade and commerce, nor any organised attempt
to develop our trade and protect industries of vital im-
portance to the country. . . . What we have now to
do is to exert ourselves in an ordered, practical, and deter-
mined manner in order to maintain that leading position
in the commerce of the world which we have held for
so long, and which is vital to our continued extension as
an Empire."

Mr. Steel-Maitland, M.P., Under-Secretary for
the Colonies, in an Inaugural Address at the Glasgow
School of Social Study and Training, October 13th,
1916 : —

" The responsibility for the solution lies upon all the
people, because the task after the war is to try to organise

THE OUTCRY FOR ORGANISATION 85

our relations internally, inter-imperially, and internationally,
as a democracy, with the same science and skill as hitherto
have been given to an autocracy. To do this above all
we need knowledge, and with knowledge we must combine
enthusiasm."

Sir Leo Chiozza Money, M.P., in the Evening
Standard, July 24th, 1916 : —

" The value of association in industry has been recognised
in nearly every branch by the formation of Federations
of Manufacturers. It would be a practicable and sensible
step to give official recognition to all responsible trade
organisations. . . . The war has proved how helpful
State organisations can be even to the most enterprising
private adventurers. It would have been absolutely
impossible to have attained to the remarkable output of
munitions which is now actually taking place if the matter
had been left to competitive enterprise."

Mr. H. Wilson Fox in The Times, September
28th, 1916 : —

" Can it be right to continue to pursue a purely passive
State policy, and to allow all our national resources to be
dealt with by individuals in a haphazard and uncoordinated
manner without regard to State needs and State oppor-
tunities ? It certainly cannot be right to assume that
what is must be, and that directions in which State
capital and management can be employed directly with
advantage for the production of wealth cannot be
found."

86 THE TRADE OF TO-MORROW

Sir George E. Foster, Minister of Trade and
Commerce, Canada, in the Canadian Gazette, August
3rd, 1916 :—

" We must in all ways fit ourselves in this Empire to
meet rivals from whatever quarter they come — be as
intelligent, skilful, resourceful, ready in organisation and
as fully mobilised as they can be, and, if possible, more
so. . . . After peace comes, there will be all the greater
necessity for getting together, working together, thinking
together, with one common ideal and one common pur-
pose."

Professor A. W. Kirkaldy, in a Presidential
Address to the Economic Science and Statistics
Section of the British Association : —

" As the war developed there has been a growing tendency
to demand organisation in every sphere of national life.
. . . Business, like everything else, is subject to evolu-
tion, and evolution on healthy lines can only be obtained
by grasping fundamental facts and applying experience
in accordance with economic laws. There need be nothing
revolutionary about the required changes in our business
organisation. We merely have to note what has already
occurred, mark healthy tendencies, and clear away or
prevent obstructions to natural growth."

Professor J. A. Fleming, in an Address to the
Society of Engineers, on May 1st, 1916 : —

" No one who has studied even casually, the German
methods can fail to admit they have realised fully in com-
mercial matters that union is strength. . . . Our ideal

THE OUTCRY FOR ORGANISATION S7

has been largely individualism and competition, theirs
has been organisation and co-operation. . . . The first
condition of success must be association and combination,
and the second the scientific method in all things."

Mr. George H. Roberts, M.P., in the Evening
Standard, October 20th, 1916 : —

" It is encouraging to observe the many signs of awaken-
ing to the fact that our industrial system was deficient in
many respects. . . . Employers are realising the necessity
to utilise in larger degree the discoveries of science, together
with greater initiative and better organisation of pro-
cesses. . . . British brain, skill, and ingenuity have
proved equal to the world's greatest emergency. British
labour also is capable of as high efficiency as the world
contains. With cordial co-operation national productive-
ness can be almost indefinitely expanded."

Dr. Dugald Clerk, Chairman of the Council of
the Royal Society of Arts : —

" It is necessary that we should as a nation, recognise
more fully the importance of co-operation and coordina-
tion in both abstract and applied science. We are intense
individualists and our great success in the world is largely
due to that quality ; it has, however, its drawbacks, and
we have arrived at a stage of development in both science
and industry where united effort would aid us rapidly to
improve our scientific and industrial position."

Mr. Sidney Webb, in the New Statesman,
April 28th, 1917 : —

" A survey of the whole field makes it clear that there
is a very real, and, as we venture to think, an ever-widening

83 THE TRADE OF TO-MORROW

sphere for the Professional Organisation of brain-workers
in the Control of Industries and Services in the modern
State, although not exactly the sphere to which its most
enthusiastic adherents have aspired."

Professor Ripper, Vice-Chancellor of the Univer-
sity of Sheffield, at the Royal Society of Arts
on May 9th, 1917, spoke of

" The national organisation of our industries, each in-
dustry being represented by its own organisation and
association, and the whole centreing round a Government
Department of Industry and Commerce."

Such a weighty mass of opinion calls for more
consideration on the part of the Government than
the subject has so far received. These and many
other similar utterances have caused industrial
interests to come together to an extent never reached
before, and the movement now cries aloud for
Government recognition and regulation.

CHAPTER IX.

DIFFERENT SCHEMES.

There are at present before the public dozens of
well-thought-out suggestions for the organisation
of trade.

That which has received most attention in the
Press is probably Mr. Sidney Webb's " How to Pay
for the War." Mr. Webb has, so far, confined his
attention to the railways, the Post Office, the coal
supply, and one or two other great national services,
and apart from an obvious and probably intentional
failure to grasp the problems of profit and loss, his
schemes are full of interest. But they hardly touch
what I submit is the far larger question of the
organisation of trade. Mr. Webb, like so many
great thinkers on these matters, appears to forget
that the railway which carries the goods is a
comparatively small part of the problem of pro-
ducing and selling.

Next, perhaps, in importance as a contribution to
the subject are the letters on " The Elements of
Reconstruction," to which I have already referred.
These letters are chiefly useful for their masterly

89

90 THE TRADE OF TO-MORROW

criticism of existing institutions. When the authors
proceed to demolish the Houses of Parliament and
reconstruct a system of representation by trades
instead of by districts, they appear to me to get out
of the range of the practical.

The exhaustive Report of the Garton Foundation
is full of suggestions which require to be studied.
The authors of this document, after a full inquiry
into most of the problems connected with social
unrest, come to conclusions which are very similar
to those which are here submitted, and set up
industrial councils for the control of industry com-
posed of masters and workmen.

" The field of action open to these Councils would
be very great. It would extend, for instance, to : —

' (a) The suggestion and consideration of

improved methods and organisation.
' (b) The maintenance of works discipline

and output.
' (c) The maintenance of a high standard of

design and workmanship.
' (d) The education and training of apprentices,

and the conditions of entry into the

industry concerned.
' (e) The demarcation of tasks.
' (/) The prevention of unemployment, the

development of security of tenure in

the trade, and the decasualisation of

labour.
" (g) Questions of wages and piece rates.

DIFFERENT SCHEMES 91

" (h) The prosecution of research and experi-
ment, and,

" (*) The improving of the public status of the
industry."

Mr. H. E. Morgan, in a book entitled " The Muni-
tions of Peace," has elaborated a scheme, which is
at least quite practical, for the establishment of a
National Trade Agency. This body, which would
have a constitution very similar to the Port of
London Authority and other semi-Governmental
institutions, would take charge of the work of sell-
ing the product of British industries abroad, would
supersede the present Consular Service, and organise
our foreign trade for us. Mr. Morgan's scheme has
the weakness which is common to so many of these
proposals and so many present-day movements,
that it attempts to deal with all trades and ignores
the fundamental principle that the only way to deal
successfully with trading problems is trade by trade,
one trade at a time.

Then there is the movement known as Guild
Socialism, and a whole series of books among which
that by Farrow and Crotch on " The Coming Trade
War " demands attention. These authors lay them-
selves open to the criticism that they devote too little
attention to the improvement and organisation of
our internal arrangements and too much to the ques-
tion of tariffs and protection against foreign compe-
tition.

Mr. Wilfred Stokes, President of the British Engi-

92 THE TRADE OF TO-MORROW

neering Association, in a pamphlet which bears the
same title as Mr. Sidney Webb's book, although it
was published long before the latter, sets out the
case for a Board of Industry. He would have a
permanent President, some man of great business
ability, with the rank of a Cabinet Minister, assisted
by fifteen leading men of business as a Council,
representing the industries of agriculture, banking,
building materials, chemicals, cutlery, electricity,
engineering, foodstuffs, hardware, iron and steel,
leather, paper, railways, shipping, and textiles. To
this Council he would add one representative each
for our Overseas Dominions. There would be a
Parliamentary Secretary, a Permanent Staff with
attractive salaries, and a large staff of Trade Com-
missioners and Trade Correspondents in each ot the
Dominions, Colonies, and foreign countries.

Sir Leo Money, in discussing the need for a Minister
of Commerce in the Evening News of July 24th,
1916, said : — " How is a practical means to be
devised for such a Ministry to keep in practical
touch with our industries ? A means lies ready to
our hand. The value of association in industry
has been recognised in nearly every branch by the
formation of federations of manufacturers. It
would be a practicable and sensible step to give
official recognition to all responsible trade organisa-
tions, and for the Ministry of Commerce to have
statutory powers of representation upon their execu-
tive committees. There is no reason why we should
not go further and see to it that every firm engaged

DIFFERENT SCHEMES 93

in an industry becomes a member of the trade
federation."

But by far the most impottant of all these sug-
gestions is that which is made by the Committee of
the British Association which dealt with the subject
of industrial unrest, and which reported to the 1916
meeting through its chairman, Professor A. W.
Kirkaldy. For the improvement of existing
industrial organisation they suggest that : — •

" Employers should be organised into —

" (a) Associations of one trade in a given

district.
" (6) National Association of one trade.
" {c) Local Federations of trades.
" (d) National Federations of trades.
' ' Of these (b) and (d) would be organised under
a system of representation.

" Workpeople should have unions and federa-
tions corresponding to those of the employers, and
in both cases the National Federations should be
carefully organised councils enj oying a large measure
of authority, tempered by the necessity to win and
preserve the confidence of their electors.

" From these two representative bodies there
could be elected an Industrial Council as a Court
of Appeal, representative of the whole industrial
activity of the country. So far as these various
bodies were approved by the State they would
enjoy far-reaching powers.

" Approval by the State should depend on the

94 THE TRADE OF TO-MORROW

observance of moderation and the working in
conformity with carefully devised regulations. For
the State in this matter would be the representa-
tive of the consumer and of the national interest.
Under this system, workpeople would enjoy all
the advantages aimed at by the extreme party,
such as the syndicalist, but the dangers and risks
inseparable from a revolutionary policy would
be avoided."

The Builders' National Industrial Parliament,
referred to elsewhere, is a scheme which has actually
materialised. This body brings labour and capital
together for the general discussion of questions
affecting the welfare of the industry, and sets an
example which might well be followed in every
industry. Mr. Malcolm Sparkes has, undoubtedly,
attained as near to the ideal as is possible on the
voluntary principle. It remains to be seen whether
the Builders' Parliament, or similar bodies in other
industries, will be able to exercise a sufficient
influence over their respective constituencies while
they lack authority and a perfect representative
basis.

Putting all these schemes together, one arrives
very easily at the conclusion that the theories
underlying the ideal solution of the industrial
problem are, first, the adoption by the State of a
direct interest in the industries of the country,
and, second, the introduction of the representa-
tive principle into trade : and we begin to see the

DIFFERENT SCHEMES 95

true functions of the Government in the matter.
If Governments would only give up the habit of
dabbling in actual trading and would confine their
activities within a proper sphere and make a study
of some of these suggestions, they would, I think,
come to the conclusion that their duty is to set up
in each industry a representative authority, charged
with the work of promoting the prosperity of that
industry for the benefit of the nation.

" Many voices are crying for large and showy
schemes," says The Times, in a leading article on
August 5th, 1916. But " a live system must grow
from within and must have life at the heart. The
trade organisations that are spontaneously forming
now point the right way. They are at the heart,
and they show that it is alive and vigorous. A
real working system will grow out of them with the
co-operation of other factors."

All experience shows that the way of progress
is the road of combination and co-operation. The
only question is the particular sort of combination
which we shall adopt. We can copy America, we
can copy Germany, and begin a couple of genera-
tions behind to compete with them in their own
way. Or we can profit by their experience, coupled
with our own, and devise a new system of joint
endeavour on the part of the individual and the
State, which is better than anything that has been
attempted in the past.

In considering the schemes for the reconstruc-
tion of industry it must not be assumed that sim-

96 THE TRADE OF TO-MORROW

plicity is necessarily a recommendation. Progress
in trade involves a continually increasing complexity.
Success will only be achieved by continual pro-
cesses of division, separation, and specialisation,
and the highest forms of industrial development
will only be reached when every productive
operation has arrived at the limit of division and
dilution.

The history of trade is the history of organisa-
tion— organisation which started in a very small
way, which progressed very slowly, and which has
gradually become more complicated and its develop-
ment more rapid. Adam was his own farmer,
tailor, baker, builder, and banker. Organisation
has gradually raised this standard, and is perform-
ing what at first sight appears a miracle. It pro-
vides us all with clothes, food, houses, and other
necessities, in quantities far in excess of what we
could ourselves provide for ourselves if we devoted
the whole of our lives to that sole object.

As civilisation progresses, the standard of comfort
is raised, and every generation demands more
goods. This demand is a progressive demand.
The mere growth of population makes necessary
devices and resources for a gross increase in the
volume of goods made, while the raising of the
standard of comfort intensifies the need.

The organisation of industry is the reply to this
problem. The present-day workman works less
hard than did his predecessor, while, at the same
time, he consumes far more goods. The problem

DIFFERENT SCHEMES 97

of the future is not to make everybody work harder,
but so to arrange their efforts that the production
shall be greater.

A favourite line of argument with a certain type
of reformer is to point to the wastefulness of a system
which demands the middleman, the speculator,
the broker, the agent, and numerous other inter-
mediaries. We are all familiar with the type of
Socialist who would cut out everybody but an all-
providing State and the consumer.

But the fallacy of this line of argument is exposed
if you will admit the proposition I have just laid
down, that the present-day workman works less
hard than his predecessor and consumes more goods.
The natural course of trade will be to multiply
intermediaries. As organisation and science are
better understood and practised there will be more
middlemen, more thinkers, more inventors, more
designers, more speculators, and more managers
than ever.

A system which aims at the~elimination of all
these intermediaries is a backward movement and
not a forward movement. As trade becomes more
and more complicated, more and more divided, as
new industries arise, as old industries are split into
parts, the little man who does nothing but keep his
office and think will become more and more of a
national necessity. This little man, who has the
chance of a fortune and the fear of bankruptcy
always in front of him, is an enormous asset. He is
responsible for most of the progress the world has

9-S THE TRADE OF TO-MORROW

made in the past, and any system which aims at
his elimination is, I submit, a bad system.

The problem is to organise all these people, to
make the greatest possible national use of them, to
encourage and help those processes of development
in which they are engaged.

CHAPTER X.

LABOUR.

Successful organisation of industry is out of the
question unless the co-operation of labour can be
secured. Satisfactory working arrangements with
labour can never be made until bodies representing
capital and management of equal standing with the
trade unions have been brought into existence.
The establishment of thoroughly representative
trade associations and unions would make possible
the creation in each industry of governing or con-
trolling bodies composed half of masters and half
of men, Trade Councils, which would be responsible
to the Government for the welfare of each trade.

The demands of labour are generally erroneously
expressed as demands for money — wages.

Finance has for too long been supreme in the
commercial world. The so-called money market
occupies a position far too important. It is in effect
nothing more than the counting-house of industry.
It is composed of a lot of superior book-keepers who
enter up millions on both sides of the ledger and call
it money. Ninety per cent, of this money does not

99

ioo THE TRADE OF TO-MORROW

exist at all. Money has been aptly described as a
foot-rule for measuring goods and services. The
workman gets an exaggerated idea of the importance
of money because in his case the bulk of his turnover
actually passes through his fingers in the shape of
coinage. But the demand of labour is not only
for money : it is first for Status, and secondly for
boots, beef, bicycles, omnibuses, or any other form
of goods or services. These things all necessitate
production.

Our position during the war makes the study of
this problem somewhat easier. There is a limited
supply of every class of goods and services available
for consumption. With care we are just able to
make our supplies satisfy our needs. If by a stroke
of the pen everybody's income were at once doubled
in so-called money, it would not make one atom of
difference to the comfort or to the real wealth of any
of us. The only way in which we can help the
country and help ourselves to-day is to produce.

I wish some way could be found of clearing this
question of money right out of the way. It is a
false issue. There is authority for regarding it as
the root of all evil : it is certainly the root of all
confusion. In the very earliest days business was
conducted by direct exchange of goods without the
intervention of money. The next stage was the
introduction of a means of exchange in the shape of
metal tallies. We have now reached the stage when
by means of banking systems we have almost entirely
dispensed with the tally, and the whole thing is

LABOUR 101

done by book-keeping entries. I do not know
whether it is possible that in the future some system
may be developed which will enable us definitely
to dispense with those incumbrances now called
money. At all events, in discussing problems like
this, it is of the utmost importance to get the idea
of money into its proper place in relation to the
whole.

The great brains that are directing the Labour
Movement understand this point, and some inter-
esting changes are noticeable. The claim of labour
used to be for money. It then became a demand for
a bigger share in the proceeds of industry, and
latterly a more advanced plea is put forward for a
share in the control of industry.

Mr. Harry Gosling, in his Presidential Address
to the Trades Union Congress, used this phrase : —
" Would it not be possible for the employers of this
country to agree to put their businesses on a new
footing by admitting the workmen to some partici-
pation, not in profits but in control ? " That is
the very latest demand of the highest authority
in the labour world.

The Report of the Garton Foundation recognises
this demand and calls it a question of status : —

" The great obstacle to co-operation is the ques-
tion of status. The ill-will of Labour towards
Capital and Management is not wholly a question
of their respective share of earnings. Friction
arising over the distribution of earnings is in

102 THE TRADE OF TO-MORROW

itself due quite as much to a sense of injustice
in the machinery of distribution as to the
desire for actual increase of wages. The
fundamental grievance of Labour is that while all
three are necessary parties to production, the actual
conditions of industry have given to Capital and
Management control not only over the mechanism
of production, but also over Labour itself. They
feel that the concentration of Capital in a compara-
tively few hands has rendered fair bargaining
between the parties impossible. A man who leaves his
work without reason inflicts on his employer a certain
amount of loss and inconvenience. A man who is
dismissed without reason may lose his livelihood.
While each great firm represents in itself a powerful
organisation, apart from any Employers' Associa-
tion to which it may belong, the men employed
by the firm are solitary units, having no power
of collective action without calling in the Trade
Unions representing the whole of each craft. In the
last resort the only effective weapon of the Trade
Union is the strike, and the loss inflicted by a strike
or lock-out on the Capitalist Class is not comparable
with the acute personal suffering of the workmen
and their families. They feel therefore that in any
dispute the dice are weighted against them."

The war has paved the way for a better
understanding, and already the views of both sides
are undergoing great modifications.

" There has been," says Professor Ripper, "an

LABOUR 103

enormous improvement in our methods of working,
as well as in the spirit of willingness to work together
and to co-operate and associate.

' There is, however, as we all realise, the danger
that after the war this spirit of co-operation will
not continue, and that the subjects of dispute
between Capital and Labour, when the present
single aim has been removed, will be so many and
so numerous as to make serious disputes more or
less inevitable. If the causes of the old troubles
remain, it is as certain as that night follows day
that the results will also remain. The causes in
the past which have led to these troubles have been
too often similar in kind to those which are respon-
sible for the great world-war. Prussian Militarism
is concerned only with conquest, and disregards
absolutely the human price, that is paid to accom-
plish its purpose. So in the past our commerce,
trade, and manufacture have been conducted too
much without regard to human and neighbourly
considerations, and for the one object only of profit
on the one hand, or wages on the other. But both
these conditions contain within themselves the seeds
of their own destruction. There are reasons, how-
ever, for believing that wiser counsels may be, on
the whole, expected to prevail. The lesson of the
need of mutual co-operation has been burnt into
our consciousness during this war as never before,
and it seems certain that employers and their work-
men who have fought together as officers and men at
the Front will return to their work, not to fight each

104 THE TRADE OF TO-MORROW

other in industrial disputes, but to co-operate to
bring about a solution of the difficulties which lie
ahead by joint and friendly discussion.

' The spirit of co-operation is not a mere senti-
ment or theory. It has been as much a scientific
necessity for the winning of this war as the provi-
sion of guns and ammunition, and it will be equally
a scientific necessity to success in the arts of peace."

The Builders' National Industrial Parliament is
the outstanding practical experiment in these
matters, among its objects being " to promote the
continuous and progressive improvement of the
industry, to realise its organic unity as a great
national service, and to advance the well-being and
status of its personnel."

If labour could be made to see that its real need
is increased production, all those wonderful powers
which labour has displayed in its fight against
capital would be utilised in solving the problem of
production. This idea is gaining ground, as is shown
by an article by Mr. T. E. Naylor, of the London
Society of Compositors.

" I suggest to you," says Mr. Naylor, " that the
time has come when your organisations should cease
to be merely defensive and resistive, and should
begin to participate actively in the development of
industry. Whether this conception is new or not,
I do not know. I do know that it has never been
tried; and I earnestly appeal to you to give it a
full trial."

LABOUR 105

If we put the problems of production in their
order they are roughly as follows : —

(1) Education.

(2) The application of science to industry.

(3) The elimination of waste.

(4) The disposal of the product.

(5) Wages.

(6) Profits.

Now the whole nation is interested in problems
(1), (2), (3), and (4). Labour and capital are equally
dependent upon their successful solution. Labour
and capital are equally entitled to express an opinion
with regard to them, and it is not until they are
solved that any question of wages or profits can
arise.

I am aware that in practice wages is the first
charge upon industry and profits the last, but it
must be recognised that the questions I have men-
tioned have to be faced before either comes into
existence at all. These questions have hitherto
been regarded as the sole province of the manage-
ment. Neither the individual labourers nor the
Trade Unions have attempted to take any interest
in them. I am not now speaking of the management
of an individual works. It is perfectly obvious that
in practice some one individual must be supreme
when the question is the actual working of some
particular shop. But we are discussing not the well-
being of particular shops, but the well-being of whole
industries. The troubles of labour arise very largely
from the lack of ability on the part of the small

106 THE TRADE OF TO-MORROW

body of masters who have hitherto had to shoulder
unaided full responsibility for the problems I have
indicated. If instead of agitating for so many
shillings a week without regard to where these
shillings are coming from or what they mean,
labour would agitate for the development of some
market which has hitherto been neglected, it would
achieve its object more directly and with more
certainty.

My demand is on behalf of the nation for the
fullest possible development of each industry.
My argument is that everyone engaged in that
industry ought to have the chance to take a hand
in that development. My theory is that this can
only be done by the introduction of the representa-
tive principle into each trade, and the setting up
of authorities for the study and control of the whole
trade. On these authorities labour should have
an equal voice with capital.

Two quotations will help my argument. Pro-
fessor Kirkaldy, in the Report of the Committee
on Industrial Unrest, says : —

" Some of the workers are asking for much more
than an increase in wages ; they are, in effect,
asking for a change of status. They are dissatis-
fied with the status of the wage-earner, and call
into question the actual relationship that exists
in industry to-day between the different factors
concerned. In fact, workpeople are taking up a
position which will preclude a mere patching up of
quarrels, or a mere scheme of wages adjustment.

LABOUR 107

What they aim at is a change in the relationship
between employers and workpeople."

Professor MacGregor, in " The Evolution of
Industry," puts the same problem in this way : —
' The relation of employment and the system
of competitive enterprise imply the government
of the great field of national labour by those who
are not under the direct industrial control of the
people. We have to ask whether it is to be the
settled form of industrialism that the policy by
which goods are made and marketed is to be shaped
on this non-representative basis, and if the great
mass of the working producers are to wait for the
call and to follow the lead of this kind of enter-
prise."

It may be of interest to notice that the same
problem is agitating the minds of the trading
community of the United States, and it is particu-
larly interesting to note that the European War
and the opportunity for the development of American
industry which it afforded, was used as an argument
for further co-operation between capital and labour.
The Report of the Conference of the National As-
sociation of Manufacturers of the United States of
America says : —

" May we not hope that both labour and capital
will come to a prompt realisation of the vast im-
portance to their interests of the unusual oppor-
tunity afforded to this country of developing

io8 THE TRADE OF TO-MORROW

its foreign commerce, and that with a clear under-
standing of competitive conditions, they will work
in closer harmony to the same great end ? "

The Trade Councils, which it is the object of
this book to promote, will have to study many
subjects besides wages and profits. There will
arise with their creation a politics in every trade,
a politics in which labour, management, and capital
will have an equal interest. Education, science,
foreign competition, costing systems, standardisa-
tion, waste of materials, new processes, Government
regulations, works practice, trade customs, and
many other subjects, will be debated week by week
and month by month at the meetings of each
Trade Council, and the numerous subsidiary com-
mittees.

The opportunity of participating in these dis-
cussions should do much to remove that feeling of
inequality of status which is at the bottom of most
industrial unrest. This opportunity would be the
answer to Mr. Harry Gosling's request that labour
should take a share in the control of industry. A
very long acquaintance with representative masters
and men leads the writer to believe that more than
half of the wisdom in these Trade Council debates
would be found to come from the labour bench.
If it could be established as a guiding principle that
the welfare of the industry was the important
thing, that wages and profits both depended upon
that welfare, and that the representatives of wages

LABOUR 109

and profits were equally responsible for that welfare,
then the whole relations of capital and labour would
be changed.

There is no suggestion here that labour or capital
should either of them sacrifice their independence.
There is nothing in these proposals which would
rob the Trade Union of the right to organise a strike
or the Employers' Association of the right to order
a lock-out. All that is done is to bring the two
parties into permanent consultation upon a statu-
tory body charged with debating, not their differ-
ences, but those subjects which can be described
as common ground. Masters and men to-day
never meet except to discuss the eternal questions
of wages and profits. They never meet except
as representatives of opposing and conflicting
forces. If it were possible to bring them together
as the joint trustees of the nation in these other
matters that I have indicated, it would surely be
found that the differences between them which
now occupy too much of their attention would
be capable of adjustment.

It is of course understood that in the industrial
development which it is hoped to promote by
means of these Councils, there must be a higher
scale of wages than has prevailed in the past.
This alteration would, in fact, be automatic, be-
cause in discussing the possibilities of an increase
of output, the labour representatives on the Trade
Council would see to it that the profits from that
increase were properly apportioned.

no THE TRADE OF TO-MORROW

Limitation of output, as I have observed else-
where, is a crime which must be charged against
the masters as well as against the men, and labour
when it gets a voice in the control of industry will
be careful to see that there is no limitation of out-
put with a view to the holding up of prices, a system
which has robbed the population of many comforts
that it might otherwise have enj oyed.

The criticisms of labour on selling arrangements
will be interesting and valuable. Labour representa-
tives on the Trade Councils will have a far better
conception of the needs of the public, and the lines
upon which manufacture should therefore be de-
veloped, than the masters. Labour will represent
in a very true sense the great buying public, and
the greatest difficulty of the manufacturer in the
past has been to gauge the likely trend of public
opinion and thus the probable movements of the
market.

The moral effect of these elected Trade Councils
will be tremendous, and it is a higher moral tone
that is wanted to settle the great capital and labour
problem. The antagonism^of capital and labour
has a sordid influence upon our public life. If the
nation would only step in and say to both : " Make
the public and the national welfare your first care,
and then look after yourselves," the effect would be
to lift the whole discussion on to a higher plane.
It should be more generally recognised that the
employing classes have no monopoly either of virtues
or brains. Indeed, if it were possible to analyse

LABOUR in

half a dozen workmen and half a dozen employers
it would be found that the workmen would contain
a higher proportion of the true Christian virtues,
although the employers might hold the record in the
matter of church attendances. Give the workman
the opportunity to know, take him into your confi-
dence, let him study the real problems of industry,
make him understand that he is an agent for civilisa-
tion, and he will not fail to respond. The £100 per
head of exports and the £500 per head of produc-
tion, which we ventured to set before ourselves as
an audacious ambition, would become a practical
possibility if the workmen were admitted to their
proper place in the control of the national industrial
activities.

There is no doubt that the future depends upon
co-operation between capital and labour. The
State can now bring this much-desired result about,
by recognising the organisations of both and uniting,
them in joint controlling bodies.

CHAPTER XL

ASSOCIATIONS OF TO-DAY.

It is a little difficult to reconcile the outcry for
organisation which we have noted in a previous
chapter with the fact that there are in existence to-
day thousands of associations and societies whose
main object is presumed to be the organisation of
trade. The war has brought an enormous acces-
sion of strength to this movement, and every new
Government Order brings fresh members to some
trade union or trade association.

Leaders of thought call aloud for organisation,
traders flock to join their federations : and yet we
are not organised. Why ?

A certain President of the Board of Trade in a
recent private conversation supplied the answer
to this conundrum. " A difficulty arises in connec-
tion with some article," he said, " and after studying
it I send for the officers of the trade association
affected. I hear their views ; they convince me of
the wisdom of a given line of action, and accordingly
I make an Order and congratulate myself on a good
day's work. But no sooner is the Order published

ASSOCIATIONS OF TO-DAY 113

than fifteen other bodies of whom I have never
heard before begin to bombard me. They insist
that the people whom I have seen do not represent
them, that I have been ' had ' by the wrong lot,
and that I ought to have made an Order in the
contrary sense to that which I have adopted."

This perfect picture of what happens daily in
almost every Government office sums up the whole
difficulty. The trouble can be expressed as the
absence of the representative principle. In trade
nobody represents anybody. The position was
accurately stated by Mr. W. L. Hichens, Chairman
of Messrs. Cammell, Laird & Co., in an address to
the Incorporated Association of Headmasters, when
he said that " he could not claim that his views
represented those of the business world. Indeed,
he did not know what the views of the business
world were, for as things were constituted to-day
there was no means of ascertaining the collective
opinion of the business world on any given subject."

A glance in passing at the present position of the
trade association movement in the United Kingdom
and elsewhere will enable us to form a better judg-
ment on the suggestions for a system of Statutory
Trade Councils, Unions, and Associations under a
Minister of Commerce, which it is the object of the
present writer to promote.

The greatest difficulty which confronts the
organiser of a trade association in this country is
the peculiar characteristics of the Briton. He has
been for so long accustomed to play his own little

H

H4 THE TRADE OF TO-MORROW

hand that he does not take kindly to the idea of
co-operation. But among the many changes which
have come over us in the last two years, one of the
most marked is a greater willingness to co-operate,
and to work in union with others. The difficulties
of carrying on business at all in a state of war have
forced many business men to seek the help of fellow-
traders. As a result the association spirit is more
strongly developed to-day than ever before, and it
is possible to put forward a suggestion like mine,
which almost amounts to compulsory membership
of a trade association, when two years ago such a
suggestion would have been entirely impracticable.

The existing associations divide themselves natu-
rally into two chief classes. First, there are those
like Chambers of Commerce which are concerned
with all trades, and secondly, the particular trade
association which deals with the interests of one
particular industry.

There is another later development, an attempt to
federate trade associations. This, however, does
not appear to have met with much success. There
is already a very powerful federation of Trade Pro-
tection Associations, societies which are concerned
with the giving of credit and the collecting of debts,
and the winding up of bankrupt estates. These
Trade Protection Associations, however, must not
be confused with the class of trade associations we
are discussing.

The British Empire Producers' Organisation is
a body of some importance which aims at securing

ASSOCIATIONS OF TO-DAY 115

the adhesion of the various trade associations of
the country. The Federation of British Industries
is a still more pretentious movement. This started
after the outbreak of war as the Institute of Industry,
and had the advantage of a speech from Sir Edward
Carson at its inaugural luncheon. It subsequently
became the United British Industries' Association,
and was widely advertised on account of the fact
that it required £1,000 subscription. Its latest
title is the Federation of British Industries, and the
subscription has, I understand, become £100.

When we come to study the trade associations
proper, we find some thousands of bodies with very
varying objects. At the head of the list should be
placed a group of strong societies which I class
together as Price Associations. They are most of
them the work of a clever body of accountants in
Birmingham, who have succeeded in getting the
Bedstead Trade, the Light Castings Trade, the
Fender Trade, and probably a dozen other industries
into well-organised combines, and in regulating the
prices of the output. These combines exist admit-
tedly for the simple purpose of the regulation of
prices, and while in some cases they do other useful
work the basis of their organisation is price main-
tenance.

Some of these associations have the most inter-
esting arrangements with labour. The Bedstead
Federation is notable in this respect. Not only have
they succeeded in satisfying labour with a sliding
scale based upon the market price of bedsteads, but

n6 THE TRADE OF TO-MORROW

they admit the labour leaders to a share of the control
of the industry, and in that way arrange a complete
boycott of non-associated firms so far as labour is
concerned.

Passing from these Price Associations, the next
most important series consists of those societies
which have their being simply for the purpose of
fighting labour. After these comes a variety of
bodies, some of them local, some of them national
in their activities, and most of them having special
objects arising out of the peculiar needs of their
particular industries.

Another class of movement is to be noticed in
local activities. For instance, we get the City of
Nottingham appointing an Industrial Council and
an Industrial Development Officer.

But the latest and the most interesting trade
association is to be found in connection with build-
ing. There has within the last few months been
established a National Industrial Parliament for
the building industry. This body is to have the
support of most of the trade unions connected with
building as well as of the masters' associations. It
is the most serious and the most promising effort
that I have come across for the settlement of out-
standing differences between capital and labour.
It remains to be seen whether as a purely voluntary
body the Builders' Industrial Parliament is open to
the danger which has proved fatal to most voluntary
bodies, that it depends upon the energies and enthu-
siasm of its promoters and their successors to keep

ASSOCIATIONS OF TO-DAY 117

it in being ; whereas if it could become a part of our
constitutional arrangements, be continually subject
to the introduction of new life by the process of
election, its future and its continued usefulness
would be assured.

Looking broadly at the whole Association Move-
ment as it is to-day, one must come to the conclu-
sion that it is a failure. The only bodies that can
claim any real practical achievement are the
" Price " Associations, and these are obviously
of a dangerous and undesirable nature. The first
necessity is lacking in all other cases. The prime
essential in any public body is an element of
authority, a status, a definite responsibility.

This essential is provided when prices are taken
in hand by the creation of a pool, with fines and
penalties and other conditions, but those societies
which do not go the length of that process, lack any
means to keep the trade together, to secure respect
for their decisions, or even to secure the nominal
adhesion of the majority of their constituency.
These conclusions are drawn not from a few isolated
cases, but from a full study of the whole extensive
movement. The result is that trade associations
crop up and die down with a rapidity and regularity
which is both perplexing and discouraging to the
believer in co-operative action. The need for asso-
ciation is felt and admitted by all, and yet the failure
of associations in trade cannot be seriously disputed.

It is for the Government to give the answer to this
conundrum. If trade organisations were recognised,

n8 THE TRADE OF TO-MORROW

if they were put upon a representative basis, if they
were made part of the constitution under which we
live, they would prove to be the most valuable of
all the public authorities.

British trade associations, taken as a whole,
suffer by comparison with German and American
bodies in exactly the same way that British in-
dividual businesses often compare unfavourably
with more recently established concerns in newly
developed countries. There are among them so
many different grades. They have not had the
advantage of recent establishment upon the most
approved system. Nevertheless, there is the basis
of a national system of trade association, a basis
upon which the Government should build the
national trading machine that is now so urgently
required.

The present position is very admirably summarised
in an article on Capitalism after the War, that
appeared in the New Statesman of February 3rd,
1917 :—

" Another development of capitalism, to which
the Government is extending no little encourage-
ment, is the systematic association of all the
manufacturers of an industry into a single body,
for the collective management of the whole industry
within the United Kingdom. The Committee of
the Privy Council for aiding scientific and industrial
research finds considerable difficulty, without such
associations in the several industries, of getting rid
of the million sterling which the Government has

ASSOCIATIONS OF TO-DAY 119

allocated for this purpose. The secretive methods
of the various employers within an industry, each
anxious to reserve for himself all the advantages
from which he can possibly exclude his British
rivals, place all alike at a disadvantage against the
well-organised Cartel or Trust which, in Germany
or the United States, so often controls the whole
of the national output. It would be much more
convenient to the Government, it would facilitate
the employment of scientific experts and enable
experiments to be conducted, if all the competing
firms would combine, at any rate for specific pur-
poses. They might unite, it is being authoritatively
suggested, for representation in foreign countries,
and agree to ' pool ' their export trade.

"The active encouragement of the Government
to this policy of an associated industry is
now being manifested by all departments in all
sorts of ways. Association is accordingly pro-
ceeding at a great rate. Sometimes what is
formed is a mere scientific society, for ^promoting
research and experiment for the common benefit
of all the manufacturers in the industry,
and for putting up a fund from voluntary
subscriptions to meet an equivalent Government
grant. Such a scientific society of manufacturers
in a single industry very quickly takes on other
functions, and easily becomes the starting-point for
price agreements, pools, and eventually a Cartel or
a Trust.

" Now, this steadily progressing substitution of

120 THE TRADE OF TO-MORROW

Trusts, Cartels, or mere associations of particular
industries for the crowd of jostling competitors on
whom we have been accustomed to rely — a sub-
stitution which the Government is now half-
consciously fostering — is, doubtless, an inevitable
development. In so far as it means the substitution
of deliberate order and system, knowledge and
prevision, for the ' happy-go-lucky,' hit or miss
ventures of the capitalist entrepreneur of the last
century, the change is one to be welcomed. Com-
bination for buying materials, for scientific research,
for standardising components and products, for
obtaining new markets, for advertising, for represen-
tation in this country and abroad, promises very
considerable economies, not only in cost, but also
in the continuity of production that it permits.
We cannot afford, as a nation, to continue the waste
that is involved in individual competition.

" But individual competition, as it has been acutely
remarked, is the consumer's substitute for honesty
in the producer. Competition, expensive as it may
be, does at least purport to protect us against
having to pay more for an article than its actual
cost of production and normal profit. If we are,
as a nation, to be deprived of this substitute for
honesty, with the consent and even the assistance
of the Government, we ought to ask the Government,
very insistently, how it is proposed to prevent the
new monopolies from putting up their prices — as we
have already found happening in the case of sewing
cotton — and thus subjecting the whole population

ASSOCIATIONS OF TO-DAY 121

to an unnecessary taxation, which is likely soon
to rival in magnitude even that of the Government
itself. Will the Government insist, with regard
to all these combinations, on something in the
nature of the ' sliding scale clauses ' imposed on
gas companies, whereby every increase in the
dividend to the shareholders is made dependent
on an equivalent reduction of price to the con-
sumer ? It may be that combination lowers costs,
but without some such provision it does not follow
that monopoly lowers price."

The union of Labour, Capital, and the State in
a three-sided partnership in Trade Councils would
provide the answer to the New Statesman's doubts.

CHAPTER XII.

TRADE ORGANISATIONS ABROAD.

So far I have made very little reference to Germany,
and to that extent I have differed from the methods
of most of those who are preaching the need for
alteration in our trading methods.

The serious reader will desire to study the question
of the permanent organisation of trade upon its
merits alone, and will not be influenced by any
considerations arising directly out of the feelings
of antagonism existing between the enemy and
ourselves. While my suggestions, if they improve
our trading capabilities, will, undoubtedly, have the
effect of putting us in- a better position to compete
with other nations, I do not base my demands
upon any considerations of rivalry between our-
selves and anyone else. I claim, that if we are to
keep a place at all in the industrial race, we must
improve our methods and become more efficient,
and in studying suggestions to that end it is use-
ful to consider what has been done in other places.
For that reason I propose to touch briefly upon

TRADE ORGANISATIONS ABROAD 123

the organisation of trade as we find it in Germany
and elsewhere.

I am of opinion that too much importance is
attached to a great deal that we hear about Govern-
ment assistance to German trade, bounties, subsidies,
railway rates, and the like. It is extremely difficult
to arrive at the facts in these matters, but the results
of my observations lead me to think that the
German's success in commercial matters has been
due to a system of more or less voluntary associa-
tions, and still more due to the fact that his trade
is new, that he is not hampered by old traditions,
by out-of-date methods, by small ideas, and even
more to the fact that he has a far better under-
standing of the value of science and co-operation
in trade than obtains here.

The Germans have developed the syndicating
and cartelisation of trading concerns to an extra-
ordinary degree of perfection. The object of these
organisations is very largely the elimination or
limitation of internal competition, and such a
systematic co-operation as will secure to the allied
firms advantages which are beyond their reach so
long as each fights for its own end. This move-
ment has now been in active progress for over
thirty years, and the combinations or cartels take
many forms. There are conventions fixing the
general conditions upon which goods shall be sold,
a loose class of association which approximates very
closely to many of our own trade societies. But
the most important development is the fully

124 THE TRADE OF TO-MORROW

fledged syndicate or cartel which regulates pro-
duction, prices, and sales, and leaves to the asso-
ciated works merely the functions of producing the
goods and dispatching them to the buyers.

These syndicates are generally described as the
result of Protection, but while a protective tariff
has undoubtedly enabled them to carry out their
purposes more effectively, it is agreed by a large
body of opinion in Germany itself that protection
has little to do with the formation of these cartels,
and is not necessary to their success. Many syndi-
cates indeed existed in Germany before protective
duties were introduced at all.

The outstanding feature of the system of German
organisation is the development of central bodies
to control sales and to allocate to each works that
part of the production which it is best fitted to
undertake. The result of the workings of this
system is that German factories are kept going
upon particular classes of work, do not each attempt
to manufacture everything, are able to specialise on
particular goods, and thus increase and cheapen
production.

According to The Times, the Germans are still
further developing this feature during the progress
of the war.

" In the campaign for economy, factories and
workshops are being standardised and specialised.
Where two shops in a given area formerly produced
indiscriminately two classes of goods, one factory
has now taken over altogether one class and the

TRADE ORGANISATIONS ABROAD 125

other factory the other class. Sometimes machinery
has been exchanged."

We must remember that we were in business
centuries before Germany really started. Forty
years ago Germany had no commercial position.
Starting at a time when manufacturing was past
the experimental stage, Germany, like America,
had the advantage of our experience. German
businesses, on the average, are built upon a larger
scale than ours. They possess from their very
newness advantages which are denied to us. For
this reason Germans have less need for organisa-
tion than we have, and yet it cannot be denied that
they possess to-day far more organisation than we
do.

Mr. T. M. E. Armstrong, in his Presidential
Address to the Insurance Institute of London,
says : —

" Our enemies in Germany have proved them-
selves great masters in the art of organisation.
The unfortunate thing is that beyond organisation
they have none of the finer virtues. We, however,
have all the finer virtues but none of the organisa-
tion."

So far from the German State having much to
do with the organisation of German trade, I am
inclined to think that the organisation of trade
has been allowed to become an abuse, and that
the German State may find it necessary to take
the matter in hand and regulate it and restrict it.
In this way we have to-day an advantage which is

126 THE TRADE OF TO-MORROW

denied to Germany. The need for organisation is
admitted, but the practice of it has not reached
such a stage that the State cannot come in and
guide, control, and encourage, without upsetting
large vested interests.

This is one of the ways in which the war has been
of great advantage to us. It has suspended our
ordinary operations, caused a definite break in
our habits, and if a new system can be inaugurated
before we return to our old ways, reforms and im-
provements will be comparatively easy.

While the German is a creature who seems to
like to be organised, the Englishman and the
American have not that peculiarity. The organisa-
tion of trade in the United States also is, however,
so far as I am able to judge, in a more advanced
state than here. The trade associations, of which
there are great numbers, are taken far more seriously
and made more use of by their members than
similar bodies in this country. It is, for instance,
quite usual for Trade Congresses to publish huge
volumes of Proceedings, showing that much more
importance is attached to the meetings of these
bodies than obtains on this side of the Atlantic.

The trade association proper in America would
appear to be little more than a trade parliament
for the discussion of domestic problems. One
interesting development which comes very close
to our subject is the establishment of export as-
sociations for the promotion of co-operative effort
in foreign trade. Some of these associations have

TRADE ORGANISATIONS ABROAD 127

been remarkably successful, and many of them keep
up expensive staffs of foreign travellers for the
benefit of their members, collecting orders and dis-
tributing them to suitable factories. They appear
to thrive most in trades like hardware, where
internal competition is to some extent limited.
Each hardware house has its own brands or pat-
terns or patents, and the foreign orders which are
taken for these particular goods come as a matter
of course to their makers. No question arises in
cases like these as to the allocation of orders be-
tween rival houses.

But the outstanding feature of American organ-
isations is the Trust. A Trust is not really an
organisation at all in the sense in which we are
now using that word. It is simply a huge single
individual business, with one banking account,
one control, and one interest. It has no concern
with the welfare of an industry. It has nothing
to do with the interests of the State. It is simply
a single unit in the commercial world, just as is
the smallest shopkeeper. Its powers for good or
evil are derived from its size and its consequent
wealth.

The Trust is a very natural but unfortunate
outcome of the tendency to co-operate and work
together among business men. It is the logical
outcome of the voluntary trade association, and
it will arrive in Germany and in this country
unless Governments have the sense to take the
movement in hand in time.

128 THE TRADE OF TO-MORROW

^The abuses from which Trusts seem to be in-
separable became so apparent in America as to
necessitate the Clayton Anti-Trust Law, and
America is now engaged in endeavouring to dis-
solve some of these huge corporations. How far
that endeavour is succeeding is a matter of opinion.

I need not emphasise the dangers of the Trust.
It is a purely selfish organisation, which is contrary
to the interests of labour, to the interests of the
consumer, and to the interests of the nation. It
is designed simply in the interest of the capitalist.

It must not be supposed that the Trust is in-
variably a success even from its own point of view.
The American Steel Trust, one of the biggest of
its kind, is so hopelessly over-capitalised and has
spent so much of its resources in a fruitless endeavour
to control the market, that its history is a dismal
one. In their efforts to absorb all the best manu-
facturing plant in America, and so obtain a monopoly,
the officials of the Steel Trust had by 1907 loaded
that concern with five per cent, bonds to the
amount of one hundred and twenty millions, and
even then they did not succeed in tempting more
than half the steel manufacturers of the United
States, and this failure to secure full control has
cost the Trust and the Steel Trade of America dear.

The Clayton Anti-Trust Law has had another
curious effect, which bears directly upon the sub-
ject of discussion. In legislating for the abolition
of Trusts, Congress appears to have produced a
measure which abolishes also trade associations.

TRADE ORGANISATIONS ABROAD 129

The Report of the Proceedings of the International
Trade Conference, held at New York in December,
1915, says :—

" As a result of the passage of the Clayton Anti-
Trust measures, we are to-day hopelessly handi-
capped in our efforts to build up foreign markets.
Forced to meet organised forces of production in
foreign markets, our manufacturers are denied the
right of co-operative effort, and are obliged to send
individual representatives into foreign markets ;
they are forbidden the right of an agreement on
prices in such markets, and are actually forced to
compete against each other, thus making the
business unprofitable to all, to the entire satisfaction
of foreign competitors. An arrangement for the
pooling of expenses and the dividing of profits
would result in a more intensive and far less
expensive handling of a foreign, market in a
particular line.

"It is encouraging to note that the Federal
Trade Commission is seriously studying these prob-
lems of organisation, and that it is giving every evi-
dence of an earnest desire to be of real assistance
to the manufacturing industries of this country
in the movement to build up our foreign markets.
We have every reason to hope that the Commission's
investigation will lead it to recorriniend to Congress
an amendment to the Trust Act permitting com-
bination in foreign trade on a fair and equitable
basis."

As might be expected, this alteration of the law

1

i3o THE TRADE OF TO-MORROW

to the detriment of trade associations has given
a fillip to the association movement, and these bodies
are stronger to-day than ever, and, curiously enough,
are all demanding assistance from the Government
and various rights and privileges of much the same
kind as are asked for here. The same Report
says : —

" To place us in a position where we may be able
to compete successfully in foreign markets, there
is needed intensive organisation of our industries for
the elimination of waste, and the development of
greater efficiency. To keep down sales costs in
foreign markets, our manufacturers must have the
right of combination in the foreign field."

The National Foreign Trade Council, another
body which has been dealing with the matter, calls
attention to the need for consolidating American
forces for the securing, and more particularly for
the retention, of foreign commerce. It points out
that the revival of peace activities in Europe will
completely alter the situation to American dis-
advantage.

" Europe's accustomed instrument for these
activities will be co-operative effort, beginning with
cartels and trade associations of producers, manu-
facturers, exporters, and bankers, reinforced by
the backing of the State, and, unless the discussions
with which industrial Europe now vibrates shall
fail, supplemented by economic alliances succeed-
ing the war alliances now in force. Continuance of the
present condition spells European industrial and

TRADE ORGANISATIONS ABROAD 131

Governmental co-operation versus American com-
pelled competition."

The situation in America seems to be not unlike
the situation here. America has the same advantages
that we have noticed in the case of Germany, of
being much younger in trade than we are, of having
started on a more modern basis, of operating with
larger units, of better education, and of a greater
national interest in trading matters. Apart from
this, it has such doubtful advantage as comes
from the possession of a number of trusts, and,
in addition, it enjoys the benefits of a system
of voluntary trade associations which secure more
general support than is given to similar bodies
in this country, and which are at present engaged
in demanding from the American Government
rights and privileges such as those which I suggest
ought to be given to our own trade associations.

It will thus be seen that the tendency of trade
all over the world is towards association. Manu-
facturers everywhere have come to realise that
they must combine. This universal conclusion
is fraught with grave dangers, as is shown by the
experiences of Germany and America, as well as
by the minor experiences that we have already
had in this country.

Unrestricted co-operation among producers must
lead to price rings or trusts. Further, it must
lead to a widening of the gap between capital and
labour. It is none the less necessary, because only
by combination can production be raised to a point

132 THE TRADE OF TO-MORROW

that will meet the needs of humanity. We are
therefore doomed here, as everywhere else, to a great
development of trade combination.

We are, however, in the fortunate position that
that development has not yet reached the stage
where it has become unmanageable or dangerous,
and there is still the opportunity for statesmen to
step in and use these proved tendencies for the
nation's good. That opportunity has always ex-
isted to a certain extent, but to-day, when, as Mr.
Lloyd George has put it, " the whole state of society
is more or less molten, and you can stamp upon
that molten mass almost anything, so long as you
do so with firmness and determination," there is
a chance that will never return for statesmanship,
and for the establishment of an ideal system of
co-operation, in which not only manufacturers but
labour and the State are combined for the good
of all. That opportunity will last only so long as
present conditions continue, and will pass very
rapidly when peace is restored.

CHAPTER XIII.

THE BOARD OF TRADE AND THE MINISTRY
OF INDUSTRY AND COMMERCE.

The advocates of the appointment of a Minister
of Commerce frequently make the error of abusing
the Board of Trade. Destructive criticism is so
easy, and looks so well in print, that many of the
supporters of a Ministry of Commerce are tempted
to make out a case against the Board of Trade,
chiefly through lack of ability to set up a sufficiently
good case of their own. It seems to be assumed
that the appointment of a Minister of Commerce
would upset the Board of Trade or be opposed
by that Department or constitute a reflection
upon its activities.

This is, however, a very short-sighted and in-
adequate view of the situation. There is ample
precedent for two or three Government Depart-
ments working within the same sphere and yet in
no essential way overlapping. The Local Govern-
ment Board, the Board of Education, and the
Home Office, are all engaged in looking after local
authorities. The first two, in particular, work
through the same bodies ; the County Council is the
medium for the operations of the Board of Educa-

133

134 THE TRADE OF TO-MORROW

tion, while being also under the control of the Local
Government Board. The Home Office, in many
of its departments, covers the activities of local
authorities. For the purposes of war we have
three distinct Departments : the Admiralty, the
War Office, and the Ministry of Munitions, while
in the case of the Board of Trade itself a separate
Ministry has now been set up to deal with the
problems of Labour.

A well-constituted Company takes care that its
Board of Directors consists of carefully chosen
persons with different interests and functions.
Every Board, to be really successful, should have
on it a "pusher" and a "brake." A commercial
concern which does not possess a man whose sole
interest is to promote production or increase turn-
over, is doomed to failure ; but unless that Board
also possesses a person who will act as brake and
will modify and control some of the schemes of
the pusher, disaster is also assured. This
illustration seems to cover the case of the Govern-
ment in its relation to the trade of the country. It
has a brake, indeed some people think a far too
powerful brake, in the Board of Trade ; but it
has never had, and this is what it must have in the
future, a pusher, a development officer, an improve-
ment minister, such as the Minister of Commerce
of the future will have to be.

The President of the Board of Trade is responsible
for the enforcement of Acts of Parliament restrict-
ing and regulating the operations of trade, commerce,

THE BOARD OF TRADE 135

and industry. That is a necessary function which
must be maintained in the future. The only mistake
that the Board of Trade has made, and it is coming
to be recognised as a mistake, is that it has endeav-
oured to introduce among its legitimate functions
a few half-hearted attempts to further the interests
of industry. In the Commercial Intelligence Branch
and the Exhibitions Branch, two absurdly small
departments, it has attempted the work of pro-
moting trade.

The Times Trade Supplement, October, 1916, gave
a most useful list of some of the principal activities
of the Board of Trade. That list is reprinted here
because its mere recitation is quite sufficient to
establish beyond question the case for a separate
Ministry to undertake the work of promoting trade.
The duties set out in this long catalogue will be found
upon examination to be the regulation and restric-
tion of traders' activities, and in only one or two
respects can they have any sort of relation to such
questions as output, turnover, export, education,
elimination of waste, improved methods, and all
the other great problems that are awaiting the atten-
tion of the Minister of Commerce.

— Harbours.
— Lighthouses.
— Pilotage.
— Foreshores.
, — Port of London.
Harbour j —Navigable Channels, Ports, etc.
— Interference with Tidal Water.
— Local Charges on Shipping.
— Wrecks : Salvage, etc.
— Loans to Harbour Authorities.
— Danube Navigation.

136

THE TRADE OF TO-MORROW

Provisional
Orders and
Administra-
tion.

— Piers and Harbours.

— Pilotage.

— Electric Lighting.

— Gas and Water Cos.

— Gas Returns.

— Metropolitan Gas Cos.

— Sanitary Conventions.

— Quarantine.

Sub. Dept. —Electrical Standards Laboratory.

f f — Wreck Inquiries.

— Local Marine Board Investigation.
— Naval Courts.
— Colonial Inquiries.
— Deaths on Board Ship.
V — Boiler Explosions.

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Inquiries.

Consular.

Wreck.

Colonial Acts

and

Ordinances.

Surveys.

Mercantile
Marine.

-Instructions.

-Jurisdiction.

-Conventions.

-Fees.

-International Questions.

-Depositions.
-Wreck Statistics.
-Instructions to Receivers.
-Rewards for Life Saving.
-Rocket Apparatus.

-Registry of Ships.
-Measurement of Tonnage.
-Passenger Steam Ships.
-Emigrant Ships.
-Cattle Ships.

— Load Line.

— Crew Spaces.

— Deck Cargoes.

— Grain Cargoes.

— Dangerous Goods.

— Ships' Lights.

— Life Saving Appliances.

— Surveyors.

— Engagement of Seamen.

— Discharge of Seamen.

— Crimping.

— Transmission Scheme.

— Health of Crews.

— Apprentices.

— Lascars.

— Sailors' Homes.

THE BOARD OF TRADE

137

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Mercantile
Marine.

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1— 1
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Sub Dept.
Office of the
Registrar-
Gen, of Ship-
ping and
Seamen.

Railway
Dept.

v. Sub Depts.

r

Companies
Dept.

Sub Dept.

' — Distressed Seamen Abroad.
— Hospitals Abroad.
— Crimes at Sea.

— Examination of Masters, Mates, and Engineers.
— Examination of Skippers and Second Hands of

Fishing Boats.
— Fishery Conventions.
— Naval Reserve.
— Local Marine Boards.
— Mercantile Marine Offices.
— Instructions to Superintendents.
— Instructions to Colonial Offices.
— Rule of the Road.
— Signals.

— Merchant Shipping Legislation.
— Registry of Ships.
— Liability of Shipowners.
— Average.
— Freight.
— Merchant Shipping (Fishing Boats) Acts.

— Registration of Ships.

— Issue of Certificates to Officers.

— Custody of Official Logs, etc.

— Quinquennial Census of Seamen.

— Information whereabouts of Seamen.

— Royal Naval Reserve.

— Railways.
— Canals.
— Tramways.

— Provisional Orders,: Tramways.
— Railway Returns.
— Canal Returns.
— Tramway Returns.
— Light Railways.
— Explosives Act, 1875.
-By-laws of Railway Cos.

1 — Standard Weights and Measures.
I — London Traffic Branch.

/ — Companies.

' — Limited Partnerships.

— Life Assurance.

— Employers' Liability Insurance.

— Fire Insurance.

— Accident and Sickness Insurance.

— Bond Investment Insurance.

— Art Unions.

— Registration of Newspaper Proprietors.

— Moneylenders' Exemptions.

— Companies (Winding-up).

i3§

THE TRADE OF TO-MORROW

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Commercial
Dept.

Sub Depts.

Labour Dept.

— Commercial Questions Generally.

— Commercial Treaties.

— Foreign Sugar Bounties and Sugar Convention.

— Foreign and Colonial Tariffs.

— Tariff Returns for Foreign Countries and

Colonies
— Special Tariff Returns.
— Statistics, Trade and other.
— Commercial Intelligence.
— Statistical

Abstracts for — United Kingdom.

— Colonies.

— Foreign Countries.

— British Empire.
— Digest of Colonial Statistics.
— Railway Statistics and Report.
— Cotton Statistics.
— Shipping and Navigation (monthly accounts

and annual statement).
— Supervision of Monthly Trade Accounts and

Annual Statement of Trade.
— Translating for all Departments.
— Board of Trade Journal.

— Trade of Foreign Countries (monthly accounts).
— Commercial Missions.

— Commercial Representations in Dominions.
— Dissemination of Commercial Information.
— Commercial Editing of Consular Reports.
— Indexing of Consular Reports on Trade.
— Patents, Designs, and Trade Marks.
. — Merchandise Marks.
V — International Exhibitions.

I — Commercial Intelligence Branch.
• — Exhibitions Branch.

— Labour Questions generally.
— Labour Gazette.
— Census of Production.
— Labour and Production Statistics.
— Immigration and Emigration Statistics, etc.
— Statistical Monographs.
— Wages Statistics and Reports.
— Prices Statistics.

— Trade Union Statistics and Reports.
— Strike Statistics and Reports.
— Abstract of Labour Statistics.
— Abstract of Foreign Labour Statistics.
— Co-operation Statistics.
— Labour Exchanges.
— Unemployment Insurance.
— Trade Boards.
^ — Cost of Living.

THE BOARD OF TRADE

139

9

— Census of Production Branch.
— Labour Exchanges and Unemployment In-
surance Branch.
— Trade Boards Branch.

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Finance
Dept.

>

— Estimates for the Votes.

— Estimates and Accts. of Lighthouses Abroad,
Lighthouse Bds., Harbours, etc., the Vote
for Mercantile Services.
— Accounts of Trade Boards and of Exhibitions

Branch.
— Accounts of Consuls and Colonial Shipping

Masters.
— Wages and Effects of Deceased Seamen.
— Wages of Seamen left behind Abroad.
— Seamen's Money Orders and Savings Banks.
— Seamen's Temporary Deposit Banks.
— Pensions — Merchant Seamen's Fund.
— Greenwich Hospital Fund.
■ — Lighthouse Service.
— Wrecks and Salvage Accounts.
— Accounts of Transmission of Seamen's Wages.
— Expenses of Surveyors and Recovery of Fees

from Owners.
— Expenses of Inquiries and Prosecutions.
— Expenses of Relief of Distressed Seamen

Abroad and Recovery from Owners.
— Bankruptcy Estates Account.
— Companies Liquidation Account.-
\ — Light Dues on Shipping.
— Lighthouse Stores.
In addition there are the chief Industrial Commissioner's Department
concerned with Labour Disputes, the Bankruptcy Department, the
Solicitors' Department, the Establishment Department, and the
Patents, Designs and Trade Marks Office.

The case for a Ministry of Industry and Commerce, if
properly constituted and built upon a basis of representative
Trade Councils, was a strong one before the war. It is
to-day unanswerable. The problem arising from the
transition from war to peace, the transition from State
control under emergency legislation to less restricted
conditions, are so complicated and present such novel
aspects that no existing Government Department is capable
of solving them, and when these are all settled, the further
problems of promoting and increasing our trade to keep
pace with the efforts of competitors and the general pro-
gress of the world, will more than justify the establishment
of such a Ministry.

CHAPTER XIV.

OUTPUT.

The foundation of industrial prosperity is produc-
tion. The material well being of a nation demands :
First, the attainment of the possible maximum,
both as regards size and quality of output,
whether of goods or services.
Secondly, the elimination of all waste of material

or effort in the process of production.
Thirdly, an equitable division of the proceeds of
industry, enabling all those concerned in the
creation of wealth to obtain a reasonable
share of its material benefits.
My contention is that we shall never reach the
possible maximum in output until we have exhausted
every device of organisation.

This question of output is already an extremely
urgent one, and in the future will assume far greater
importance. Our position in relation to our com-
petitors had become serious even before the war.
Figures which have been prepared by Mr. Charles
Lancaster are typical of many that could be given
to show the necessity for a radical alteration in

140

OUTPUT 141

our point of view on this vital matter of output.
Labour and Capital are equally at fault, and both
will suffer unless great changes are made.

The following is a Report prepared for the Liver-
pool Chamber of Commerce by Mr. Lancaster : —

" Whatever arrangements are made for conduct
of British trade after the war, one thing is absolutely
certain, and that is that the output of manufacturers
of all kinds in this country will have to be increased
to an extent undreamed of by our manufacturers
and trade unionists. The chief competitor of the
United Kingdom in the future will not be Germany,
but the United States of America. Few will doubt
this who have devoted any attention to the matter
of the manufacturing efficiency of the two countries.

" I will illustrate by quoting from the first Census
of Production in this country published by our
Board of Trade relating to the year 1907, and con-
trast a few points with the American Census of
Production for 1909. I cite five important indus-
tries in each country — viz., boots and shoes, card-
board boxes, butter and cheese, cement, and the
clothing industry. To compare the relative effi-
ciency of the two countries let us compare the horse-
power used for 1,000 men and also compare the
value of the product per wage-earner. Such a
comparison reveals the fact that per 1,000 wage-
earners the British boot and shoe industry employed
172 horse-powers only, and the United States 486
horse-powers. In making cardboard boxes here
we employed 114 horse-powers per 1,000 workers,

i42 THE TRADE OF TO-MORROW

and the United States 590 horse-powers per 1,000
workers. In butter and cheese we employed 1477
horse-powers per 1,000 workers, and the United
States employed 5*507 horse-powers per 1,000
workers. Cement here employed 3*195 horse-powers
per 1,000 workers, and the United States 13875
horse-powers. Clothing industries here used 45 horse-
powers per 1,000 workers against 165 horse-powers in
America. In these five industries the horse-power
was from three to four times as great in the United
States as in the United Kingdom. The plain
meaning of this is that every American worker
turns out from three to four times as much as his
British competitor.

' ' Then if we compare the value of production per
man in each country we find the output of 1,000
men confirmed as to the value of that output.
The value produced in the United Kingdom by
each worker in the boot and shoe industry per year
was £171. In America £516. In cardboard boxes
£106 here and £275 in America. In butter and
cheese here £1,310 and £2,979 *n America. In
cement £192 per year and £472 in America. In
clothing industries £158 and £484 in America.

" The five industries named are typical of nume-
rous others.' In most comparable cases we find that
machinery per 1,000 workers is about three times
as powerful in America as it is here, and that output
per worker is about three times as great.

" British industrial output can be doubled and
trebled, but neither capitalists or workers have yet

OUTPUT 143

tackled this increased production by employing
labour-saving machinery. Indeed the efforts of too
many British workmen and their leaders have been
directed to limiting production absolutely regard-
less of the natural economic law that the greater
the number of units of production the smaller is
the cost per unit, because the fixed charges, necessary
to incur whether output be small or large, are spread
over a greater number of units produced, thus reduc-
ing the cost of each unit. In America the greater
production per man leads to greater consumption
per man, that is, to his prosperity.

" Now I do not propose to dwell on this phase.
I only say that the inaptitude and ignorance of
many manufacturers and their workmen here are
directly accountable for the lack of efficiency we
as a manufacturing nation display in many direc-
tions.

:' We are as unprepared for the commercial war,
which will follow the close of the military war, as
we were for the military war itself. In the latter,
a miracle has been worked — and millions of men and
thousands of millions of money have been raised.

" But we cannot expect a similar miracle to be
worked in the manufacturing industries upon which
the life of a nation — that is, its export trade —
depends. Much ground will have to be broken,
and much missionary work undertaken, before any
progress can be expected, even in preparing for
fuller discussion, but it is not too soon to enlist
earnest thought — with a view to action later on."

144 THE TRADE OF TO-MORROW

Dr. Dugald Clerk, in the Annual Address to the
Royal Society of Arts, puts the same point in
another way : —

" It is a remarkable fact that the United States
of America, with its ioo millions of population,
is adequately served as to its industrial needs by
8-35 millions of workers, while we require 8-24
millions to supply the needs of 437 millions."

Mr. Charles Lancaster has made another valuable
contribution to the same discussion in an article
in The Times Trade Supplement of January, 1917,
where he deals with the output of coal and shows
how the tendency of the United Kingdom has been
steadily downward, while that in other parts of
the world has been to increase.

" During the twenty-five years ending 1912, the
number of tons of coal produced per annum per
person employed in the industry in the United King-
dom fell every year from 312 tons in 1887 to 244
tons in 1912. In the United States it increased
every year from 400 tons in 1887* to 660 tons in 1912.
In Australia it increased from 333 tons to 542 tons,
in New Zealand from 359 tons to 503 tons, and in
Canada from 341 tons to 472 tons. In other words,
the number of tons of coal produced per coal worker
per annum is nearly twice as large in Australia,
New Zealand, and Canada as it is in the United
Kingdom, and nearly three times as much in the
United States of America as in the United Kingdom.

"No doubt the coal seams in America lie nearer

OUTPUT

145

the surface and are of larger dimensions. Also
the ' adits ' allowing rail haulage up hill to the pit-
mouth largely replace the deep shafts in our own
country. But, after making full allowance for
these things, the British miner has a good deal to
account for. A study of the coal tables of 1912
will demonstrate the ominous reduction per man of
coal-getting and the increase in price per ton at the
pit-mouth in the United Kingdom from 4s. zod. in
1886 to 9s. ofd. per ton in 1912. Also the decrease
in price in the United States of America from 6s. 4^.
per ton at the pit-mouth to 6s. id., and the decrease
in Australia from 9s. 2d. to js. 6\d. In New Zealand
the price remained in 1912 about the same as in
1887, viz., 10s. lod. per ton, although wages have
been periodically increased in all countries men-
tioned."

This is not a matter of tariffs ; it is not a matter
of wages or profits : it is solely and simply a question
of organisation and the " will-to-produce."

But in securing maximum output it is not only
essential to employ the best machines, and to see
that the energies of every worker are utilised to
the best advantage. It is also necessary to see that
every factory in an industry is employed upon the
particular class of work which it can best perform.

This point can be illustrated from practical experi-
ence by taking any industry and examining closely
its methods of procedure. The furniture trade as at
present carried on in this country will serve our

K

146 THE TRADE OF TO-MORROW

purpose. This trade is useful as an illustration
because something has already been done along
lines which must be followed a great deal farther
before the maximum output is reached.

Many years ago English furniture was almost
entirely made by small " garret masters," who sold
their wares to wholesale merchant houses. The
extravagance of making each piece of furniture
separately and by hand began to be realised about
thirty years ago, and since then great factories have
sprung up in different parts of the kingdom, and
machine-made furniture has largely taken the place
of the hand-made goods with which our fathers were
content. The result has, of course, been greatly
to cheapen furniture generally, and to raise the
standard of comfort in the homes of the people to a
point that would have been considered unthinkable
a quarter of a century ago.

But even with this tremendous advance the possi-
bilities of improvement have not been explored to
anything like the maximum extent. An inspection
of the catalogues of the leading furniture manu-.
facturers would show that each of them is attempt-
ing to make almost every class of furniture. The
aim in each case is to put on the market a complete
range of goods which shall include everything that
is required for the furnishing of the cottage or the
mansion.

Turning for a moment to America, the fashion
there is found to be entirely different. Huge
factories at Grand Rapids and elsewhere confine

OUTPUT 147

the whole of their energies and attention to one line
— chairs, desks, or carcase work. It is extremely rare
to find a desk firm touching upholstery. The
American does not aim at covering the whole of his
trade. His ambition takes a different form and is
summed up in the one word " carload."

If it were possible to reorganise the English furni-
ture trade, and to divide up the different articles
made between the different firms engaged, so that
the whole of the energies of one big factory could
be devoted to one class of work, the result must
be greatly to increase output and to minimise cost.

But this does not by any means exhaust the
catalogue of advantages that would accrue from
such an arrangement. Another result that would
constitute an enormous saving would take the form
of a reduction of stocks. In the ordinary way all
these furniture houses hold big stocks of hundreds
of different articles. Thus it comes about that some
common pattern of cheap bedroom chair will be
in stock at fifty different places, and a vast amount
of capital locked up in that one line.

Another result of the ideal arrangement which
we are here debating would be a great reduction in
the amount of machinery employed for a given out-
put. The present method involves the employment
of expensive machinery on short runs and the waste
of much valuable time in altering and adjusting
that machinery to the next 3 ob. If the wood- working
plant of the country could be kept going in the same
way that the shell-making plant is now employed,

148 THE TRADE OF TO-MORROW

and each machine be continually occupied with
one process, the saving in machine time and expense
would represent a very substantial difference in the
price of the finished article.

For these and similar reasons the capital employed
for a given output in furniture is a great deal more
than is necessary. The locking up of money in this
way may partly explain why the British manufacturer
finds it difficult to extend that credit to foreign
buyers which is stated to be given with such readi-
ness by German traders.

If we could imagine the English furniture trade
cartelised as it would be in Germany, there would be
formed a central selling organisation which would
cover the whole world much more efficiently and
with considerably fewer persons than is done by
the present individualistic and competitive method.
That selling organisation would collect all the orders
and allocate them to different works according to
their capacity. The works would then be classified
for special operations and every article would be
produced with the maximum of economy.

It is, of course, not suggested here that we should
adopt the German cartel as our model, but it is
suggested that a Trade Council, possessing certain
statutory powers and embodying the whole trade,
would be able to exercise a very considerable
influence in the direction of the economies outlined
above.

The orthodox answer to any such suggestion as
this is found in the two words " Competition "

OUTPUT 149

and " Consumer." It is argued that unless you allow
absolutely free play to competition you place the
consumer at the mercy of the producer. If it is
true that there is no way of bringing about these
reforms except through a trust or cartel, then I
should be inclined to agree, but if it is possible to
set up a system of State-controlled associations which
while eliminating waste shall maintain the best
features of the individualistic plan, then I think this
argument falls to the ground.

There is a branch of study which economists seem
to me to have neglected, and which I should like
to see further explored. It is to discover the line
beyond which competition ceases to be an influence
for economy and becomes an expense. It is obvious
that we have developed the competitive system to
the point where it adds very greatly to the cost of
most of the articles that we produce. That being
so, it is idle to talk of competition as a protection
for the consumer.

The managing director of one of the largest iron
foundries in the country, discussing this subject with
me recently, put the possibilities of output higher
than I should have ventured to go. His company is
engaged in the production of probably a thousand
different articles, a range of lines necessary to the
company to keep its place under our present system
of competition. This expert assured me that if
his foundry could be employed exclusively upon the
production of rain-water pipes, he had the facilities,
the labour, and the room to turn out twice the

150 THE TRADE OF TO-MORROW

present total production of the United Kingdom.
If the matter could be carried one stage further,
and it could be arranged that these works were con-
fined to the production of one size of one pattern
of rain-water pipes, I was assured that it could
produce five times the total output of the country
under the present system. Such a scheme as this
would amount to the application of the munition
method to every trade ; the sub-division of goods
and the sub-division of operations, the classifying
of works and the allocation to each of that part of
the product which it was best fitted to produce.

" The day of conservative and scattered individual
effort is over — it leads to certain ruin," says the
Daily Telegraph. " Success lies only in concentra-
tion by collective effort and the pooling of individual
interests for the common good. The industrial
problems of the future must be faced, and faced
quickly — moreover, they must be solved, and solved
quickly. The onus of responsibility falls primarily
on capital, in the provision of standardised organisa-
tion, direction, and equipment, whereby the best is
accurately determined and the best is progressively
maintained : thereafter capital and labour must co-
operate in standardising rapid production, so that
good general trade may be promoted by steady
employment at high wages to the lasting benefit
of the industries concerned and the general welfare
of the entire community."

It is perfectly obvious that if we are to hold our
position as leaders in the commercial world we must

OUTPUT 151

find some system of co-operation between producers
so that overlapping of effort may be prevented,
internal competition eliminated, and, by the careful
allocation of production among works in accordance
with their experience and plant capacity, effective
competition made possible in foreign markets.

If only we could reach the point where we could
begin the study of each trade as a whole as a national
asset, regarding its work as a national interest,
and we could contrive to get both labour and capital
to devote themselves to this study, I feel sure that
a great deal could be done towards the increase of
our output, which would, of course, mean the capture
of foreign markets, the reduction of price, and more
commodities for everybody, more real wealth, which
is exactly the same thing as either an increase in wages
or an increase in profits, and ought to bring both.

In the past, so far from studying the possibilities
of increasing output, the tendency has been deliber-
ately to restrict output. We have heard a great
deal in the last few years about the limitation of
output on the part of the trade unions. The iniqui-
ties of the system known as " ca' canny " are, in
my mind, no worse than the iniquities of the stupid
competitive system which forces every manufacturer
to attempt to cover the whole of his trade and thus
waste half of his energies.

To give effect to the undoubted need for a great
increase in the output of our industries, the willing
consent of both capital and labour is essential, but
something more than consent will be wanted if

152 THE TRADE OF TO-MORROW

anything practical is to be done. The problem
requires to be studied by the organisations of both
parties to industry, and both will have to assume
responsibilities with regard to it. First of all,
the employer will have to demonstrate beyond any
question of doubt that he is capable of finding a
satisfactory market for the increased output if
labour consents to do its part. The restriction of
output on the part of trade unions has been and is
justified by the fear, often well founded, that no
proper organisation existed to prevent gluts and
consequent unemployment.

It would, therefore, seem that the first essential
is the establishment by manufacturers of adequate
selling arrangements abroad, and this can only
be done upon a co-operative basis. Employers,
generally, are fully alive to this side of the problem,
and the only means at present open to them of over-
coming its difficulties is to combine in the form of a
trust. Voluntary associations are quite helpless in
the matter, and this part of the case provides the
strongest argument for State action in the setting
up of Trade Councils with power to tackle the
problems of export on behalf of the whole trade.

From the man's point of view there are two or
three considerations which will weigh with him
when he is asked to forego the system of " ca' canny, "
which has been so laboriously and carefully built
up in this country. It should, I think, be more
generally known that this system is peculiar to
Great Britain, and if an appeal were made to the

OUTPUT 153

patriotism of the working classes and it were shown
that their prosperity depended upon competition
with great industrial countries where no such scheme
was in operation, a different point of view with
regard to it might prevail.

Some readers may remember the great strike in
the building trades in Chicago, which was one of
the worst that America has experienced in recent
years. The basis of this strike was a demand on
the part of the workers for the right to enforce restric-
tion of output. It did not succeed, but it did great
damage to the trade of Chicago. As a result of it,
the United States Government appointed the late
Carroll D. Wright, who was at that time Commis-
sioner of Labour, to undertake an investigation as
to the extent to which restriction of output was in
force throughout the world. Mr. Wright reported,
after the most exhaustive inquiries, that restriction
of output or what was known as the " ca' canny "
policy had obtained but slight foothold in America,
or, in fact, in any other country except in England.
England was the place where the idea had originated
and the only place where it was in full effect in
many important trades.

The report of the investigators of the United
States at this time is worth study by those who are
interested in this problem.

The next consideration that should be impressed
upon labour is the undoubted fact that, all over
the world, wages are highest where there is the
greatest amount of power and machinery in use,

154 THE TRADE OF TO-MORROW

and where output is at its maximum. The lowest
wages in the world are paid in China. The Chinese
are a people of an industrious, clever, and intelligent
type, yet they work entirely by hand for a wage
which is represented by onlyTa few pence a day.
The highest wages in the world are paid in America,
where more machinery is used per worker than in
any other country.

When labour has been assured that unlimited
production is free from the old risks of gluts and
unemployment, and when it has been proved that
high production and the latest machinery mean
high wages, something else will still be necessary
before it will consent to forego what it regards as
its privileges in these matters. Labour will not
accept these conclusions from capital or from any
other authority. It must find these facts out for
itself. It must be satisfied that this is not some
capitalistic scheme with the sole object of increasing
profits. It must be satisfied that increased output
is really in the interests of humanity and civili-
sation, and in the interests of its own class. That
satisfaction can only come from a larger participation
on the part of labour in the problems of industry.
If labour were given an* equal place with capital
on Trade Councils, and made to share the responsi-
bilities for the welfare of each of our national indus-
tries, it would come to see that wages and profits
are really only minor parts of the problem, and all
the economic follies of the pre-war labour policy
would die a natural death.

CHAPTER XV.

EDUCATION AND RESEARCH.

The two great questions of Education and the
Application of Science to Industry will never be
satisfactorily settled until trade is organised. We
spend on both subjects a great deal of money, but
we fail to get value for our money because, true to
our traditions and characteristics, we persist in
performing this work in scattered and spasmodic
efforts without any real plan. The result is a great
deal of overlapping and waste.

When we have succeeded in getting our industries
organised, and when we have a Trade Council or
some similar authority to study, promote, and control
each industry, those Councils will, of course, turn
their attention to the subject of Education.
" From the trade point of view there are several
rough divisions into which education can be classi-
fied. The relation between trade and elementary
education is not very apparent, and it is not easy to
see what influence a Trade Council could have upon
the conduct of elementary schools. It is neverthe-
less the fact that the great majority of the children

i5S

156 THE TRADE OF TO-MORROW

who attend these schools are destined for some
form of industrial activity, and there is a very great
deal that could be done in the elementary stages to
interest the child in these matters.

There is, of course, no suggestion here that elemen-
tary education should be specialised or that children
should be taught trades. But a great deal could
be done, and ought to be done, to direct the infant
mind to a proper view of industry. The boy of ten
sets before himself a model of a man, and all too
frequently that model takes the form of a police-
man, or a sailor, or a Dick Turpin, or some modern
cinema hero, and it never dawns upon him that
there is any romance, any dignity, or any real
interest in other forms of manly activity. With
my own boys I have made it a regular practice, one
day in each holidays, to visit some factory and allow
them to investigate manufacturing machinery and
processes in their own way.

When we come to the secondary and technical
schools, the interest of industry becomes more
obvious. It is an admitted blunder that we are
spending great sums of money in this branch of
education on the strength of the opinions of educa-
tionists, without any regard, or with hardly any
regard, to the views of the trades concerned. The
lack of a link between a trade and its trade school is
felt very keenly by those who are responsible for
the latter, but they are quite helpless in the matter
so long as trade remains in its present chaotic condi-
tion. When a skilled trader does go out of his way

EDUCATION AND RESEARCH 157

to take an interest in a trade school he always finds
himself heartily welcomed by the authorities and
the instructors, but occasional outbursts of individual
interest cannot compensate for the lack of any
official concern on the part of a trade for the edu-
cation of the students who have elected to follow
that trade as a career.

One is often struck with the fact that the boy of
thirteen or fourteen becomes bored with school and
determines to get out into the world and earn his
living. This is not entirely a matter of pounds,
shillings, and pence, although the prospect of wages
has undoubtedly something to do with it. The boy
will generally tell you that he is fed up with schooling
and wants to get into a more serious world. It has
never dawned upon him that there is any connection
between his education and his later work : for the
present system has failed to link up academic
theories with their practical application. The lad
does not understand the meaning of that which
he has to study. A proper system of co-operation
between industry and education would find a way of
altering his point of view.

It is fortunately unnecessary to debate at any
length the need for improvement in our educational
system, because there is no doubt that great improve-
ments will be made. The only point that need
occupy us here is that those improvements will be
far more effective, far more practical, and have a
much better chance of success, if they are made with
the advice and assistance of those who are engaged

158 THE TRADE OF TO-MORROW

in the practical side of industry. The Trade
Council in each trade would be able to exercise an
enormous influence for good in this matter.
'^The subject of education, however, as it concerns
the welfare of an industry is not exhausted when
proper arrangements have been made for the young.
The Trade Council would have an even more difficult
problem to tackle in connection with the education
of those actually engaged in its trade. Development
along these lines would involve the constant diffusion
of knowledge as to trade customs and practices in
other countries, apart altogether from much neces-
sary work in educating both employers and employed
in the principles of industrial economics, and the
aims and aspirations of the industry in which they
were engaged.

Next, the public has to be educated. A healthy
trade, developed to its fullest extent, is impossible
without a sympathetic public opinion behind it.
This is a branch of work that has never been studied
in the past, and cannot be studied so long as a trade
is composed merely of disconnected individuals.

The possibilities of education will expand indefi-
nitely when labour begins to take an interest in
them, and if ever the ideal is reached, we shall all
be engaged in educating ourselves and one another
throughout our careers. Maximum output, elimina-
tion of waste, the perfection of the product, and all
the ideals which we should keep constantly before
us, are not to be attained without the true educa-
tional spirit.

EDUCATION AND RESEARCH 159

Labour from the lowest to the highest grades
always requires more education. An examination
of the present position, a walk through any factory,
will show this to be so. A mechanic will be found
reading drawings, and managing somehow to do his
work from the rough and ready knowledge of draw-
ings that he has picked up in the course of his
apprenticeship. That mechanic would read those
drawings with far more interest, and his work would
be better, if he had had an opportunity of going
through a course of draughtsmanship. An operator
will be found working a lathe, and by the rule, the
reason for which is quite unknown to him, he will
have his cutting tool clamped near to the cutting
edge. If he had been given the opportunity of
studying the elementary principles of mechanics,
and had learned the rule of the lever, the reason
for the particular way in which he has to adjust
his machine would be obvious to him, and his work,
instead of being drudgery, would be a matter of
scientific interest. An engineering draughtsman, who
now drags out a weary existence with a pen and ruler
and tracing paper, would stand a better chance of
advancement, and his drawings would be improved,
if he had been able, during the period of his educa-
tion, to see something of the practical side of the
work that he was doomed to draw for the rest of his
life. The shop manager has probably been selected
because of his ability in the management of men,
an ability which is natural to him and which has
not been acquired at any school. That manager

160 THE TRADE OF TO-MORROW

would manage far better if he had a greater know-
ledge of the scientific side of the work that came
under his control.

In short, the linking up of the educationist and
the trader and the joint control by them of industrial
education would result in an alteration in the point
of view of most of the people engaged in industry,
and add very materially to their interest in the work
in which they were engaged. Labour unrest would
not be so prevalent if every labourer had the educa-
tion which would enable him to see the true purpose
of;the work he was doing, instead of regarding him-
self/as he frequently does at the moment, as a sort
of automatic machine in which nobody has any
interest.

The improvement of our industrial education
does not necessarily mean a great addition to our
expenses. There will, of course, always be a demand
for more money for education, and it is right that
it should be so, but if we were content to spend only
the same amount of money and were to bring our
arrangements a little more into line with practical
requirements, great improvements would result.
sQA few examples will make this point clear. There
are thirty-eight schools which were recognised by
the Board of Education in 1908 for the teaching of
cotton spinning. There were at the same time some
dozens of trade organisations, societies, and unions,
interesting themselves in cotton spinning, and yet
inquiry shows that these trade organisations do
not appear to take any action as regards the educa-

EDUCATION AND RESEARCH 161

tional training of persons engaged in the industry.
In cotton weaving there are thirty-five schools,
and the same remark applies. In engineering the
case is even worse. The Board of ..Education has
approved or authorised over eighty schools where
engineering is taught, and to these must be added a
great number of institutions which do not seek the
assistance of the Board. In engineering there are
probably twenty Trade Unions and a large number of
Employers' Associations and Federations, and yet
it has to be admitted that no trade organisation has
pursued any vigorous action relating to educational
training. Instances are to be found where local
education authorities have invited engineering asso-
ciations or trade unions to nominate one or more of
their members to represent them on advisory com-
mittees, but this is not the result of any system, and
is the full extent to which co-operation between the
trade and education has gone.

As an example of the ramifications of the Board
of Education in technical training, it may be men-
tioned that there are no less than twenty-one schools
which receive its assistance for the education of
boys who are going into the fishing industry, thus
showing that there is no lack of desire on the part
of the State to spend money in trade education,
even though traders themselves take no interest
in the matter.

There are thirty schools teaching wool and worsted
spinning and weaving ; sixty-eight schools where
coal-mining is taught ; thirty-three give instruction

L

162 THE TRADE OF TO-MORROW

in shipbuilding ; 122 are available to the boy who
desires to become a printer ; while even trades like
millinery and upholstery can boast fifty-five and
twenty-five schools respectively.

Electrical engineering very naturally heads the
list of technical schools, with a total of 169, the
reason being that there is no industry in which the
necessary proportion of skilled to unskilled workers
is so high. The lowest grades of operatives in
electrical work must of necessity have some know-
ledge of the principles of electricity. A close
examination of these schools discloses a much
greater amount of interest on the part of the
individual members of the industry in the training
given, but very little organised connection between
the trade and training seems to exist.

Turning to the subject of Scientific Research,
there is here enormous scope for the activities of
the Trade Councils. The progress of any industry
depends upon the continual introduction of new
knowledge. This is a fundamental principle which
the British manufacturer has always failed to grasp.
The neglect of science by British industry in the
past is the chief reason for the loss of many valuable
trades to more progressive countries.

The individual manufacturer is, as a rule, obliged
to keep a very tight grip on the purse-strings. It
is very few individual concerns which can afford

EDUCATION AND RESEARCH 163

to spend large sums of money unless they are assured
of an immediate return. Scientific research is
absolutely barred by any such restriction. To be
of any real service it involves the continual spending
of money, without any tangible and immediate
return. The British trader works upon quotation :
he will not place an order until he has got a price :
but, unfortunately, you cannot get a quotation in
advance for the discovery of a new material or an
improved process. Scientific research has, therefore,
had to be left in this country to universities and
other institutions that can afford to be independent
of profit and loss. Thus we find a large amount of
research work in progress, research which has a
direct bearing upon industry, but no direct connec-
tion with industry. It may be safely stated that
much useful scientific work is done in laboratories
which is never heard of by the men who could turn
it to practical account.

The case for the union of an industry for the pur-
pose of research is unanswerable, and if Trade
Councils were set up for no other reason than to
take care of- the scientific side of each manufacture,
they would be amply justified. It is, fortunately,
not necessary to argue this matter, because the
State has already recognised these principles and
the machinery exists for carrying them into effect.

The recently established Industrial and Scientific
Research Department, the outcome of the Research
Committee of the Advisory Council, is organised
and equipped ready for the service of our trades.

164 THE TRADE OF TO-MORROW

It is prepared to co-operate with any trade associa-
tion that will take up this vital question of scientific
research. Sir William McCormick, to whom the
credit for this new departure is chiefly due, has laid it
down as a principle that the State will work in this
matter in conjunction with trade associations.
In this way it is hoped to get the operations of the
new Department upon a proper scale, in keeping
with their importance.

Hitherto the State has been willing to a limited
extent to assist individual researches, but at last
the importance of the subject has been realised in
high places. The near future should see the estab-
lishment of numerous Trade Research Associations
working in conjunction with the Government for
the benefit of whole industries instead of individual
firms. The relations between the Government and
trade under the present scheme of the Research
Department represent the nearest approach yet
made to the ideal.

But the Department is perforce doomed to work
through voluntary associations of the existing type.
Under Sir William McCormick it has advanced from
the practice of dealing with private firms to work-
ing arrangements with groups of firms in Associa-
tions. When the State places at its disposal elected
Trade Councils representing whole industries, upon
whose attention it has an official claim, and
whose assistance it can command, then, and not
till then, the union of Science and Industry will be
complete.

CHAPTER XVI.

STATISTICS.

Among the numerous tasks that await the official
Trade Councils of the future, none is more of vital
importance than the preparation of adequate
statistical information.

When a stockbroker makes a price' and completes
a bargain he has to go to the board and " mark
it up." Every detail of his trade is thus laid open
to public inspection. All his experience, all his
judgments, are thus placed freely at the service of
the whole market. In return for the information
as to his own business, which the stockbroker
gives to every one of his • competitors, he receives
similar information from everybody else in the same
business. The same sort of procedure is followed
on most other markets and exchanges. The result
of it is that these trades are both standardised and
consolidated, and, while they have to stand the
full force of legitimate competition, they are free
from the risks and disadvantages that apply to
most other trades which are carried on by individuals
in the dark.

165

166 THE TRADE OF TO-MORROW

There is, it seems to me, scope for great develop-
ment in trade statistics, if the principles under-
lying the conduct of the trade of the stockbroker
could be applied to other businesses. Those of
us who are closely acquainted with the habits and
methods of the British manufacturer can re-
member a time, not so very far distant, when
auditors and accountants were considered " up-to-
date " fads, unworthy of the attention of the really
serious men in trade. That class of opinion has
now disappeared, and it is extremely rarely that
one hears, except in the Bankruptcy Court, of the
absence of a proper system of accountancy in
connection with any business.

The next step in this process of development
will be the recognition of the need for a sort of
auditor-general for every trade. The advantages
which accrue from the production of prompt and
accurate figures in connection with individual
businesses are now universally admitted. But
the advantages which would accrue from the
collection and publication of general figures for
any one trade are not at present thoroughly under-
stood.

The average British manufacturer is working in
a condition of hopeless ignorance. He knows all
about his own business, but so far as the general
condition of the trade in which he is working is
concerned he knows practically nothing. His own
expenses are carefully analysed under proper
headings, such as materials, labour, rent, insurance,

STATISTICS 167

advertising, travelling, power, depreciation, and
trade expenses. He may tell you that materials
cost him 30 per cent., wages 40 per cent.,
advertising 5 per cent., carriage i£ per cent.,
and so on. He knows that the tendency of his
own business is for materials to go up, and that
improvements in machinery are reducing the per-
centage of the labour cost. But he has no idea
as to the relation which his percentages bear to
others or to the ideal.

A manufacturing house with which I am ac-
quainted figures that a special class of operation
costs it is. yd. an hour, and on this basis makes
its estimates. But for all I know, the proper cost
of that operation may be is. $d. or is. gd., and this
particular house may be either economical or
extravagant. That is a mystery which, under the
present arrangements, cannot be solved.

If ever the ideal condition is reached in our
trading organisation, every British industry will
have a representative Trade Council, and on its
staff will be a highly paid and highly qualified
statistical officer, whose duty it will be to keep the
trade right on these matters. This statistical
officer or auditor-general will be furnished with
powers that will enable him to collect from mem-
bers of the association all the information that he
requires for the general good, and will publish
week by week, or month by month, the result of
his investigation in the shape of tabulated returns.
£.When this is done, the British trader will discover

168 THE TRA0E OF TO-MORROW

that on the average, in his line of business, materials
cost, say, 35 per cent., labour, say, 42 per cent.,
and carriage, say, 2 per cent. If his own figures
show materials 40 per cent., he will know at once
that he is 5 per cent, higher than the average in
this respect, and that as the average is the product
of his own figures and others, somebody is corres-
pondingly below. The result will be that he will
investigate his methods and endeavour to discover
where the fault lies. And the end of any such
system will be a general reduction in costs, or, to
put the matter in another way, the elimination of
an appalling amount of waste which now goes on.

All this information would, of course, be collected
by the statistical officer, under proper guarantees
as to secrecy, and would only be used in such a
way as not to damage the individual giver of it.
The strongest objections to any such system would
probably come from the "big " men, who are generally
conceited enough to think that they understand all
about their own businesses. But the most super-
ficial study of the problem will show that unless
the big man represents more than half of the total
industry, he will receive more than he gives in the
way of information.

As a matter of fact, there is nothing original or
startling in the suggestion that trade information
should be collected and published in this way. The
electric light industry, tramway companies, gas
corporations, and municipal enterprises are doing
every week exactly what I suggest. In connection

STATISTICS 169

with electric light, the most elaborate statistics
are prepared week by week and published. Thus
every engineer in charge of a power station is con-
tinually engaged in endeavouring to improve his
figures, and show better results than his rivals.
The same process is at work in less obvious ways
in every up-to-date trade, particularly in motor,
shipping, and rubber companies. In these industries
it is extremely common for one man to be a director
of two or three companies. The result of this
arrangement is that all the information about
which we are now talking is at the service of these
companies.

^ There is a great deal more in this subject than
appears at first sight. We are faced with the
problem of increasing British trade. It is admitted
that when peace comes we must do considerably
more business than ever before. This is the only
way in which it is possible to meet the charges that
have been heaped up by the war. Seeing that
prior to the outbreak of hostilities we were just as
busy as we could be, and unemployment was at
its lowest level, it is obvious that ~ we can only in-
crease our output by a wholesale system of re-
organisation, by the elimination of waste, and by
the study of economical production.

Now these things can only be done on the basis
of figures. We must alter our way of looking at
business. We must give up thinking of individual
concerns and study trades as a whole. Only in
that way will it be possible to bring about the

170 THE TRADE OF TO-MORROW

increase of production that will be necessary to meet
the financial needs of the future. There is for
every trade an ideal costing system, and it should
be the duty of the statistical officer of the Trade
Council to produce that system.

Costing systems, which have acquired considerable
popularity among better-class traders in the last
ten years, have hitherto been regarded as a means
of checking competition and keeping up prices.
They are generally designed to educate the small
man as to the real costs of business, and thus get
him out of the habit of quoting unremuherative
prices. The costing system can be of far greater
service if generally adopted by whole trades, and,
if accompanied by the publication of trade statistics,
is likely to have the effect of reducing prices and
cheapening production.

Mr. W. Howard Hazell, in an article on Cost-
finding in The Times Trade Supplement of October,
19 16, gives some valuable information as to the
results secured from the introduction of a proper
system of costing in the Master Printers' Associa-
tion. Mr. Hazell fails to point out what is obvious
to any careful observer of printing in the last few
years, that the activities of the Master Printers'
Association in this and other ways have brought
about an all-round improvement in the standard
of English printing work, and he would no doubt
admit that the thorough investigations of the
Association into costs have had a very great deal
to do with this improvement.

STATISTICS 171

" In many well-organised industries there is
an efficient system adapted to the particular trade,
which is recognised as essential in any factory where
good management and good profits are desired. On
the other hand, there are many trades which are not
so well organised, where accurate methods for cost-
finding have not been studied, and where the quota-
tions for work to be done, or charges for goods
manufactured, vary considerably. This variation is
often due not so much to the greater efficiency of
one factory as compared with another, but to the
difficulty of arriving at the real cost of production,
when the question is complicated by heavy standing
charges, seasonal trade, and work produced some-
times by hand and sometimes by machinery. In
trades where a uniform article or unit is produced,
such as a ton of coal, a tin of condensed milk, or
the haulage of a ton-mile, the problem is much
simpler than where the production is variable in
form, value, and quantity.

" It has been found that the result of a correct
and efficient cost-finding system is not only to arrive
at all the costs of production, but to prevent waste
and delays of various kinds, to check errors of
management, and generally to increase the
efficiency and economy of the works. It may be
said that any accountant could instal a cost-finding
system in a factory, but modern manufacturing is
so complicated that each industry is faced by
peculiar difficulties, and though the broad principles
remain the same, the details must be adjusted to

172 THE TRADE OF TO-MORROW

the circumstances and condition of each trade.
Herein lies the advantage of the subject being
dealt wjth by well-recognised leaders in the industry,
as their endorsement of any methods would have
far more weight than the recommendations of an
outsider, who might be thought to be pushing his
ideas for his own pecuniary benefit.

" The war has shown how greatly German
trade has benefited by co-operation amongst the
members of a particular industry ; and the old
Ishmaelite policy of every man's hand against every
man (which was too prevalent in this country) is
slowly breaking down. There is much yet to be
done in organising our ways and standardising our
methods to meet the present abnormal conditions,
and the more difficult and competitive times that
are coming. Probably there is no course more likely
to lead to success and to bring satisfactory results
in the immediate future, than for each industry
in which modern cost-finding methods have not
been adopted and standardised to investigate the
question, prepare a suitable system, and then
carry on an active campaign to secure its general
adoption."

Anyone who has worked for half a dozen firms in
the same line can tell amusing stories of manu-
facturers jealously guarding " secret processes,"
" special methods," which are really grotesquely
behind the general level of practice in the industry.
It has been known for a manufacturer to be at
great pains to keep information of his methods from

STATISTICS 173

a rival in the next street — who was, in fact, work-
ing on a vastly better system.

We have so far considered trade statistics in their
relation to costs, but there is, of course, the other side
of the account which is no less important. There is
no information which the average trader regards
as more confidential than that which concerns
his customers' accounts, and the amount of his trade
in different towns or different markets.

On the other hand it can be argued that there is
no more stupid form of secrecy. If it were possible
to lay bare the secrets of twenty makers in the boot
trade it would probably be found that one market is
permanently overstocked with boots, while another
is badly neglected. It might similarly be discovered
that the reason for the low price of a particular type
of article is that far too much of it is manufactured.

Statistics and Standardisation run together. The
diagram on p. 174 illustrates vividly the advantage
of the application of statistical information to
processes of manufacture. The diagram was used
by Professor Ripper, Vice-Chancellor of the
University of Sheffield, in a lecture to the Royal
Society of Arts on May 9th, 1917, and the following
explanation extracted from the lecture makes its
meaning clear : —

" The diagram supposes a piece of work to require
four operations from the raw material to the com-
pletion of the finished product. Two pieces of
work, ' A ' and ' B,' were started at the same
time, but by different methods. In each of the

174 THE TRADE OF TO-MORROW

respective stages, the irregular A line indicates the
rate at which the work is done upon the article ' A,'
and the irregular B line similarly indicates the rate
at which the work is done upon the article ' B.'
It will be seen that during the first operation the A
process is quicker than the B process ; in the second
operation it is slower ; in the third operation the A

c aV d

process is again the faster, and in the fourth opera-
tion it is the slower. The total time required to
complete both articles ' A ' and ' B ' is shown by
the diagram to be the same.

" This diagram well illustrates the conditions
obtaining in all forms of manufacture. It is obvious
by studying it that each of the articles could easily
have been completed in considerably less time.

STATISTICS 175

For example, in the first operation there is no reason
why the ' B ' process might not, in the future,
be similar to that employed in ' A,' and if, in each
operation respectively, the best methods be adopted,
the operation will be completed in the time given by
the line OAC, obtained by extending the line OA
parallel to that of the best process in each case, the
whole line representing the sum of the best processes.
This line, therefore, represents the standard method
of doing the piece of work in question until some still
better method is discovered. If the four separate
operations had not been analysed it would never
have been discovered that any such improvement
could have been made, and therefore, if no atten-
tion had been given to the time involved in the
manufacture of the article, there is reason to fear
that the quicker process in each case might easily
have degenerated into the slower methods in each
case. By summing up all the slower methods we
get the line OBD drawn parallel to the slower pro-
cesses, and showing that the total time taken in
this case is several times as great as is required by
the standard method line OAC. In many branches
of manufacture, instead of there being only four
operations, as shown on the diagram, there might
easily be forty, in which case the difference between
the summation of the forty best methods and the
forty slower methods might make a very consider-
able difference indeed in the final cost of the product,
resulting in the one case in a handsome profit and
in the other case in a serious loss.

176 THE TRADE OF TO-MORROW

" The principles of this diagram are of general
application, and may be used to locate sources of
loss throughout the whole process from the raw
material upwards."

An important field for the activities of the statis-
tical officer exists in connection with foreign trade.
There is an immense amount of work to be done
on behalf of individual industries in the collection
and arrangement of the statistics of other countries.
It is quite remarkable how little attention is paid
to these matters at the present moment.

A good deal of information of this class has now
to be obtained from the Commercial Intelligence
Branch of the Board of Trade, but the number of
manufacturers who take advantage of these facili-
ties is extremely limited. The reason is probably
to be found in the fact that a Government official
is seldom the proper person to compile trade
statistics. No man can possibly be an expert in
machinery, boots, jam, eggs, and clothing. These
Government Departments endeavour to do the
impossible when they produce statistics and reports
upon different branches of commerce. The only
man who can give a report which is worth having
upon the export of boots from America or from Ger-
many is a man who knows something about the boot
trade. If the figures are to be useful they must be
analysed and subdivided in a way possible only to
a boot man. If each trade were to employ a
statistical officer for no other purpose than to produce
accurate and reliable information as to the trade of

STATISTICS 177

competing countries in neutral markets, the expendi-
ture and the trouble would be amply worth while.

But I have not by any means exhausted the many
sides of this fascinating subject of trade statistics
and information. We have heard a good deal lately
about " key " industries, and the Government,
which has to shoulder the blame for anything that
goes wrong, is blamed for allowing certain industries
to drift into the hands of the Germans. I cannot
see what the Government has to do with it, or how
this catastrophe could be avoided in the absence of
statistics and information.

The war has shown us that we have been relying
too much upon Germany for certain articles upon
which our business depends, but if the war had not
intervened we should still be in ignorance of these
matters. The fact is that individual manufacturers
have been carrying on their business in their own
way, as of course they were perfectly entitled to do,
and that they have all discovered that certain articles
could be bought advantageously in Germany. They
had all hoped that their competitors were ignorant
of this advantage, and Germany has been allowed
to secure the business because different British
manufacturers were not on speaking terms with
one another.

We have now discovered these key industries,
which are in the hands of the Germans, but there
are many more which are controlled by other
countries, notably America, and unless some system
is available whereby our traders will pool this

M

178 THE TRADE OF TO-MORROW

information and allow it to be circulated for the
common good, no power on earth can stop a
recurrence of the danger.

I have no desire to enter into the tariff controversy,
or to express any views on the merits of free trade
or protection, but it is worth while pointing out in
this connection that tariffs and statistics must go
hand in hand. It is surely quite reasonable to ask
that, in considering the question of a tariff, the
Government shall require that the industry shall
show the necessity for some form of protection.

It may well be that the German or the American
is capturing the trade by reason of superior organi-
sation, more highly developed co-operation between
makers, improved methods of manufacture, lower
costs, and the elimination of wasteful and extrava-
gant competition. It would be unreasonable for
the home trade to ask for protection in order that
it may bolster up its own antiquated methods and
thus deprive the public of the advantages of the
more scientific procedure of the foreigner. If, on
the other hand, the British industry could show
through its statistical officer that its methods were
right and its systems good, and it was still unable
to meet foreign competition, then it seems to me
that the case for a tariff would be unanswerable.

To sum up the whole matter, my plea is for the
appointment by each Trade Council of a qualified
accountant, auditor, or statistician, to bring to the
industry, as a whole, the benefits which arise from
proper accountancy and recording methods in
individual businesses.

CHAPTER XVII.

FISCAL REFORM.

Fiscal reform is no part of my subject, and I should
not refer to it but for the fact that any discussion on
trading matters which ignored this question would
be regarded by some people as entirely beside the
point. In my judgment, tariff reform has been
allowed to occupy far too much of the stage.
This is very largely due to the activities of Chambers
of Commerce, and other institutions which, by
reason of the fact that they attempt to cover every
trade, are unable to deal with the practical problems
of any. These bodies are driven into politics, and
they take up tariff reform because the idea of a
tariff has a way of appealing to the manufacturing
classes from whom most of their subscriptions are
derived.

I agree with that part of the tariff programme
which calls attention to the weakness of the British
industrial position. It is no answer to this argu-
ment to point out, as most free traders do, that we
are still at the top of the scale of export business, and
that America and Germany remain in second and
third positions. It is perfectly true that we are

179

180 THE TRADE OF TO-MORROW

doing a wonderful export business. The per capita
trade of the three great industrial nations — Great
Britain, Germany and America — in 1911, was in the
proportions of six, three, and two. But the wise
business man is not the one who counts up the gains
of years ago and takes satisfaction from them : it
is he who looks to the future. If America, Germany,
Japan, or any other country, is allowed to develop
better trading methods, better systems of produc-
tion, than we have here, then whatever may be the
supremacy at the moment, the time is coming when
we are going to drop behind.

I part company with the tariff party when they
claim that these tendencies are the result of a tariff
only, or that they can be checked by a tariff only.
The nation that will win the industrial race is not
the nation with the most scientific tariff, but the
nation with the best all-round organisation.

The question of a tariff has been hopelessly com-
plicated by political party considerations. Peers
and politicians have thrown themselves into the
debate, and Tariff versus Free Trade has been ele-
vated to a position altogether too important, and
held up as a matter of political principle. But in
reality the advisability or otherwise of a tariff has
surely nothing to do with principle : it is a matter
of detail and of expediency. A tariff may be neces-
sary to one trade and fatal to another. It may be
good at one time and bad at another. It may, as
we have lately discovered, be necessary for reasons
which are reall^ military and not economic at all.

FISCAL REFORM 181

' There is no need to stir the embers of ancient
controversies under their whitening ashes. Accord-
ing to the circumstances of the individual case we
can be Free Traders, Protectionists, Socialists, at
the same time in different parts of the Empire." '

The question of a tariff, however, is extremely
useful to my argument. If this country does decide
that it will experiment with protection (a decision
that I personally hope will never be taken), we shall
arrive at the point when it will be necessary to settle
how much per cent, to put upon, say, boots. As we
are at present constituted, that problem will have
to be settled by Imperial Parliament elected upon a
basis which has nothing to do with boots, or worse
still, by some Committee composed of Members of
Parliament and their cousins, with probably a noble
peer thrown in because he happens to be the Chair-
man of a Boot Company.

The poor boot trade will not be consulted in the
matter at all. It is true that the Boot Section of
the Chamber of Commerce will pass some resolution,
but the Chamber of Commerce is composed of
avowed tariff reformers, and the Boot Section can-
not pretend to represent the industry from which it
takes its name. Surely if we require to know what
would be good or bad for the boot industry in the
matter of a tariff, it is an essential preliminary to
put that industry into a position where it can express
an opinion on the matter. That can only be done

1 Sir Joseph Compton-Rickett in the Contemporary Review, May,
1916.

182 THE TRADE OF TO-MORROW

by the establishment of some representative organi-
sation on the lines of that for which I am pleading.

There is another point I should like to make while
on this question of tariff. The most ardent tariff
reformer will admit that tariffs should be used as a
means of defence against the industrial rival, and
not as a means of bolstering up inadequate methods
or lack of enterprise and ability on our part. If the
population here is enjoying the advantage of better
boots by reason of an American invasion, boots
which are at the same time cheaper and more durable
than those made at home, then it would be an
iniquity to use a tariff for the purpose of robbing the
population of that advantage in order to help an
industry which was obviously out of date.

If the boot trade wants a tariff it ought first to be
made to show that it is properly organised, that it
is run upon scientific lines, that there is no waste,
that its arrangements for output are of the most
modern description, that it has made every possible
use of the services of science in developing its
industry. If, having done all this, it is still unable
to meet foreign competition, owing to the presence
of, say, sweated labour abroad or some local advan-
tage which cannot be secured at home, then the
argument for a tariff would be an extremely strong
one.

Thanks to the war, we have several very useful
examples of protection in practice to guide us in the
consideration of this subject. We have not, it is
true, adopted the full Protectionist programme, but

FISCAL REFORM 183

by means of prohibition, limitation of imports,
export bounties and actual tariffs, we have accumu-
lated a number of very convenient illustrations of
the working of the principles of protection. A study
of any of these Orders, of the muddle and confusion
which have followed from them, the hardships and
injustice which they have inflicted in different ways,
is quite sufficient to justify the present suggestion
that no tariff can ever be satisfactorily settled in a
Central Government Office. A tariff is essentially a
matter of business, and to attempt to touch it with-
out consulting those who have experience of the
industry affected is obviously a clumsy and im-
possible procedure.

The Government decided, in the name of the war,
to set up a system of export bounty on palm kernels.
It is not intended here to discuss the case for or
against this action, but it should be noted that this
decision was taken and put into effect : and then,
and not before, Parliament was consulted on the
matter. The Times report of the debate in the
Commons on August 4th shows the resentment of
the House of Commons at this method of issuing
Orders and discussing them afterwards. But the
position of the trader under a system of protection
designed and elaborated in a Government Depart-
ment would be far worse than that of the House of
Commons in the matter of the palm kernel regula-
tions.

A very useful example of the absolute need for
expert advice in this matter of tariffs is furnished

184 THE TRADE OF TO-MORROW

by the experience of the duty on pianos and parts.
The Government put heavy duties on foreign pianos
in order to stop their importation, and at the same
time to encourage British piano makers to make
every effort to export home-made pianos, and thus
in both ways they hoped to help the difficult problem
of exchange. If, however, they had had the advice
of an official Piano Makers' Trade Council they
would undoubtedly have found some way of achiev-
ing this result with far less trouble than was actually
involved. The duty on pianos and parts carried
with it of course a drawback system in the event
of any of these goods being exported. In view of the
impossibility of manufacturers getting domestic
supplies of certain parts, a very great impetus was
given to the importation of a number of essential
parts, all makers of fittings, frames, and so on, being
engaged on munition work.

The difficulties in the matter became apparent
when pianos began to be exported containing any
parts which had paid the new duty on importation.
The work of identifying the parts on which duty had
been paid proved too much for the Inspectors of
Customs. It was found that in a consignment of
half a dozen pianos about six hours were occupied
in displaying the identification marks on the various
parts and packing the crate ready for the inspector's
seal. One of two things, therefore, happened :
either the Government lost in inspectors' time far
more than they got out of the duty on the imported
parts, or in cases where the inspection was made on

FISCAL REFORM 185

the manufacturer's premises the manufacturer was
put to greater expense by claiming rebate than
the amount which he received in respect of that
claim.

" Consequently," says The Times Trade Supple-
ment of April, 1916, " an endeavour was made to
simplify matters. Trade estimates were taken,
showing the total value of the piano output and the
proportion exported. The amount paid in duty on
imported parts was known to the Customs, and it
was a simple matter to value the average amount
due for rebate on the value of pianos exported. It
is understood that the Customs authorities were
ready to adopt such a system, but at once obstacles
were created, as one might expect would be the case.

' The first difficulty was set up by the Custom
House itself, where the authorities pointed out that,
much as they would like to adopt the scheme, it
was contrary to the law under which they were
working, the Finance Act of 19 15, and in order to
enable them to adopt such a scheme it would be
necessary for the Act to be amended. There seemed
to be such a clear case that the President of the
Piano Manufacturers' Association petitioned the
Chancellor of the Exchequer to receive a deputation
to place before him the views of the trade in regard
to drawback. Mr. McKenna declined to see the
deputation, and there the matter rests so far as the
Custom House is concerned."

American manufacturers have discovered to their
cost some of the disadvantages of tariffs made in

186 THE TRADE OF TO-MORROW

high places. In some cases the American tariff
raises the costs of manufacture so high that not only
does it prevent the American manufacturer from
competing in the foreign market, but it allows foreign
competitors to get in and undersell in the home
market notwithstanding the existence of a tariff.
This rather complicated point is set out very clearly
in the Iron Age of New York, which comes to the
conclusion that dumping may be in some circum-
stances entirely normal and continuous, and that
tariffs cannot stop it.

But the greatest trouble with tariffs is what is
known in the States as " graft." The most power-
ful argument against a tariff is that it must tend to
lower the standard of Parliament. Even if the
British legislator should be proof against direct graft,
there will still be a tendency for particular trade
interests to send men to Parliament for the purpose of
promoting these interests. Whether under a system
of tariff we should escape the Parliamentary scandals
which are associated with every other tariffed
country in the world remains to be seen, but on the
introduction of a Tariff Bill every Member of Parlia-
ment is bound to be subjected to the most persistent,
troublesome, and tempting lobbying. Now if a
system of trade government were established, if we
were to decentralise all these trade matters, take
them out of the province of Parliament altogether,
and set up Trade Councils in every trade to which
these matters could be referred, this grave danger
of graft would disappear. It would be impossible

FISCAL REFORM 187

to bribe a Trade Council to alter its views with regard
to some matter that vitally affected its trade.

It may be thought, indeed it has been suggested,
that a Trade Council would at once demand protec-
tion for its trade. This is not necessarily true. The
Trade Committee of the Chamber of Commerce
demands a tariff, but that Committee is not represen-
tative. The persons upon it go there chiefly because
they favour a tariff policy and look to the Chamber
of Commerce to help them to promote it. If instead
of a Committee of the Chamber of Commerce, there
were a representative Trade Council elected by the
votes of every member of the trade, it is extremely
doubtful whether that elected Council would accept
the views so freely expressed by these self-appointed
Committees, which are at present the only spokes-
men for the industry.

The point is, however, not worth labouring. It is
too obvious that no tariff should be contemplated,
until the true opinion of the trade concerned had
been ascertained. There is no greater scandal in
politics than the way in which tariff agitators have
produced trading examples without any authority
to speak for the interested parties.

From the Empire point of view nothing could be
more dangerous than a revival of our old political
Free Trade and Protection controversies. To have
the varying interests of different parts of the Empire
made the subject of party welfare in the mother
country is a procedure fraught with extreme danger
to the future of the State. Imperial Parliament

i88 THE .TRADE OF TO-MORROW

must, of course, have the last word on the question
of a tariff, but it is obvious that each industry must
have a chance to state its case officially and repre-
sentatively, and this can only be done through Trade
Councils which can speak in the name of the whole
industry.

CHAPTER XVIII.

EXPORT.

It is useless to increase output unless provision is
made for its disposal. There is no more advan-
tageous method of disposal than exportation. In
fact, exportation on an unprecedented scale is
essential to us for many pressing reasons.

Ever since the outbreak of war we have been
exporting credit, and steps must be taken to recover
that commodity. During the centuries we have
gradually risen to the proud position of the greatest
creditor nation. That position has now been very*
seriously weakened and must be recovered. In
order to finance the war we have been obliged to
call in loans abroad and to reverse the old position
by raising external loans. It is quite essential to
us to get back to our old status in this matter, and
those foreign loans must be replaced. Hence the
need for exports.

But the duty to export can be stated in another
way. We lead mankind because we have the repu-
tation for being the greatest civilising force in the
world. We stand in the eyes of the nations for
progress, but progress reduced to practical and

189

190 THE TRADE OF TO-MORROW

material terms means boots and shoes, railways,
sanitary appliances, knives and forks, soap, and
watches, and on the extent to which we supply these
things rests, in some degree at least, our position
in the van of civilisation.

Although we have per head (I am speaking now^of
pre-war times) the largest export business in the
world, the full possibilities of exportation have
never been realised in this country. It is the
greatest folly to rest content with the fact that we
happen to be doing more business in this way than
others. We have been at it for centuries ; others
have only just begun : and it would indeed be a
marvel if, after a mere thirty or forty years, either
Germany or America were able to show an export
position which would compare with ours.

I cannot too much insist that it is necessary to
realise that we are in danger of losing not only
our lead in export matters, but our export trade
itself, unless we improve our methods. The posi-
tion in regard to any particular industry in a par-
ticular foreign market is roughly this. The German
trade, through its cartel, has a perfect system of
representation in that market. There is no competi-
tion as between Germans. America is in almost the
same position, where, through one of their export
associations or through one of their huge trusts,
they have that market properly organised and its
requirements looked after by an expert staff. But
Great Britain, which for centuries has been in the
habit of supplying this market, has nothing but a

EXPORT 191

personal connection between a number of individual
British manufacturers and a number of individual
foreign buyers. Those individual manufacturers
are in many cases in direct competition with each
other, and each of them has to meet not only the
competition of the German and of the American,
but the still more dangerous competition of his
fellow-countrymen.

There is no attempt on the part of that British
trade as a whole to study or to capture that market.
So long as it suits individual manufacturers for
their own individual ends to carry on business the
nation is content to allow them to do so. But,
except for a Consular Service the inadequacy of
which I will, for the moment, take for granted, there
is no attempt on the part of the British nation to
safeguard its interests in foreign markets. We are
committed to the policy of laissez jaire. The Board
of Trade will issue all sorts of regulations and appoint
all sorts of inspectors, all of them, however necessary
they may be, of a nature to hamper industry, but
no Government Department will concern itself
with the work of developing foreign markets on
behalf of British trades.

There can no longer be any doubt that every trade
must present a united front to foreign competition.
The struggle of the future in the foreign market will
be between German goods, American goods, Japanese
goods, and British goods, and that competition will
be sufficiently severe without further competition
between individual British manufacturers. In fact,

192 THE TRADE OF TO-MORROW

if the present system remains unaltered, the British
manufacturer does not stand a chance against the
foreigner.

We hear a great deal about the German com-
mercial traveller, and there is no doubt that the
Germans have developed a system of personal
representation in foreign markets which is by far
the best of its kind. Our own colonies are overrun
with German representatives to such an extent that
I was told by a hardware dealer in Winnipeg, that
his records showed nine visits from German repre-
sentatives to every one from English travellers.

Travelling abroad is an expensive luxury. To
maintain an adequate staff of foreign travellers is
beyond the means of most English manufacturers.
In order to arrive at only the pre-war state of per-
fection of the German in this respect, manufacturers
must combine.

There are those who argue that this can only be
done by means of wholesale combinations and
amalgamations, the buying up and uniting of busi-
nesses, and the creation in this country of the five
million instead of the £100,000 standard as the
commercial unit. I submit that the same results
may be possible by a system of co-operation through
recognised Trade Councils such as I have outlined.

Another weak spot in English arrangements for
foreign representation is that the men who travel for
us are not always experts in the goods which they
have to sell. In the absence of co-operation between
manufacturers of a kind, it is extremely common

EXPORT 193

for half a dozen houses in quite different trades to
combine together to pay the expenses of a repre-
sentative to some market abroad. The result is
that a representative is chosen by reason of his
knowledge of the locality to which he is assigned,
his knowledge of the language, and his general
commercial ability. He cannot be an expert in the
half a dozen trades which he is called upon to repre-
sent. He can do little more than show the printed
catalogue and use such personal influence as he
possesses to secure a share of the orders that are
going. If instead of different trades clubbing
together to meet the expenses of a foreign represen-
tative, the custom were for men in the same trade
to join hands, it would be possible to send to each
market an expert in each industry.

We are constantly told of the ability of the Ger-
man to adapt himself to the requirements of a
particular market. Our Consuls have written reams
to show how German goods are so made as to meet
the peculiarities of the buyer. The reason for this
is, in my judgment, the fact that the intermediary
between the German and the buyer is, as a rule, a
technical expert in the goods which he is called upon
to sell. These trifling alterations, which, however,
make for success or failure, are matters which
demand the attention of the expert.

But apart from these details it is obvious that
the best salesman is the man who is thoroughly
acquainted with the goods which he has to sell.
The old system under which we export our products

N

194 THE TRADE OF TO-MORROW

through some merchant house which knows all
about bills of lading and customs' peculiarities, and
ships everything from boot-blacking to pianos, is
doomed in face of the method which the Germans have
developed, through their cartels and selling organi-
sations, of placing the whole resources of Germany
in any particular industry in the hands of an expert
staff in each market.

While on the subject of export it may be interest-
ing to notice what is happening at the moment on
the other side of the Atlantic. The European War
has given to American exporters great opportunities
for expansion, and, as British manufacturers know
to their cost, full advantage has been taken of those
opportunities. 1

The Chief of the Bureau of Foreign and Domestic
Commerce at Washington, Dr. Edward Ewing Pratt,
in a Report to the International Trade Conference
held at New York, in December, 1915, says : —

" The growth of our export trade in certain parts
of the world is worth a. little very serious con-
sideration. If we compare our foreign trade in
1913 with our trade in 1915, we find some very
interesting results. Supposing we compare the four
months — June, July, August, September, 19 13, with
the same four months in 1915 : we find that during
that period our trade with Canada has decreased
about 9 per cent. ; our trade with Central America

1 Since these lines were written America has joined the Allies, but
it does not follow that American manufacturers will, on that account,
lose all the advantages which the war has brought to them.

EXPORT 195

has remained practically stationary ; our trade with
South Africa has increased 12 per cent. ; our trade
with South America has increased 22 per cent. ; our
trade with Asia has increased 51 per cent. ; and,
perhaps most remarkable of all, our trade with
Australia has increased 77 per cent. These facts
demonstrate beyond question that our trade with
countries unaffected directly by the war has in-
creased temporarily.

" The next important question for consideration
is whether or not we shall be able to hold this trade.
Some people are of the opinion that following the
war the European countries will flood, not only our
own market, but the other markets of the world,
with cheaply-made, low-priced manufactured
articles. The predominance of opinion, however,
seems to be, and I must confess that the facts and
logic of the situation seem to urge this view, that
the costs of production and consequently prices
will be much enhanced in European countries and
that, in spite of the best organised and the most
vigorous efforts on the part of our European com-
petitors, they will not be able to compete in our
own markets and in other markets of the world on
as favourable terms as they have been able to
compete heretofore. I believe, and I find that
most of those who are professionally engaged in
foreign trade hold a similar opinion, that we shall
be able to retain the major part of the markets
which we gain during the present disturbed
world conditions."

196 THE TRADE OF TO-MORROW

Newspaper writers are very fond of telling us
what glorious opportunities await the British
manufacturer in Russia. But they fail to point
out what is happening to-day between America
and Russia, and the struggle that is in front of us
when peace comes to catch up the start which
America will have had. Dr. Pratt, in the same
Report, says : —

" There is one market especially which is worth
the most serious attention on the part of every
manufacturer and exporter. I refer to Russia. The
imports into Russia during the last few years,
averaged about $500,000,000 ; roughly one-half
of these imports have come from Germany. Not
all of those products have been of German origin,
for the Germans have, in many cases, acted as the
middleman for the Russian trade. Here is a great
trade open at least on fair and equal basis to the
American manufacturer and exporter. We must
not forget that Russia is a country of great natural
resources, a country which is in large part unde-
veloped. Her railroads, her ports, her public
utilities are still in large part to be built. Her
mines and natural resources are in large part still
to be developed. And let me point out that Russia
during the next fifty years will go through a period
of development very much like that through which
the United States has been going in the last fifty
years. Our manufacturers and exporters are par-
ticularly well qualified to meet the urgent demands
of the Russian market."

EXPORT 197

The American Government understands the needs
of expert foreign representation much better than
does our own Board of Trade, as is shown by the
announcement that the Bureau of Foreign and
Domestic Commerce of the United States has
appointed a special agent to investigate the field
for railway equipment and supplies in the far
East, Australia, and South Africa. The British
Government would in like case have sent a Trade
Commissioner to one of these places, with general
instructions to report on trade conditions, but no
case is on record, so far as I am aware, of the Govern-
ment ever having appointed a special agent for
the purposes of a special industry to investigate
a market.

But the Germans and Americans are not the
only people who understand the value of co-opera-
tion in pushing foreign trade. Wherever we turn
abroad, this idea seems to have found a greater degree
of acceptance than it has in Great Britain. Sweden
is a very good example of successful co-operation
for the purposes of export. There is a General
Export Association of Sweden, as well as a large
number of specialised bodies, the most active of
which is probably the Swedish Wood Export Asso-
ciation, which practically controls the great trade
that Sweden does in timber, paper, and paper-
making materials.

Canada can also claim to set an example in this
way. The Export Association of Canada is one
of a number of bodies that are founded upon this

198 THE TRADE OF TO-MORROW

idea. Its objects are to secure detailed informa-
tion and actual orders for its members, to introduce
representatives of Canadian firms to the most
important buyers of other markets, to collect
and make shipments of export orders, and where
possible to finance the same. The Association
has already opened offices in different parts of the
world, and arrangements are being made for estab-
lishing large sample rooms in important centres.
It was responsible for an interesting exhibit of the
products of its members at the Lyons Fair. It
is also establishing machinery for the sale of Canadian
goods in markets as far removed as Siberia.

Co-operative export trading is beginning to be
understood in Great Britain, and quite a number
of trade associations are debating the matter.
For instance, the National Leather Goods Manu-
facturers' Association has before it a scheme
whereby the members of the association would
combine to send out to the markets of the world
an exhibition of British-made leather goods over
a given period in certain selected centres.

But the loosely formed voluntary trade associa-
tions, which are all that we possess at the moment,
are necessarily badly handicapped in any scheme
of this kind, and success is only to be achieved in
those rare cases where self-sacrificing individuals
are prepared to take the whole responsibility upon
their shoulders. Opinion in every trade is ripe for a
scheme of combined action, and the opportunity for
the Government to institute such a plan is unique.

EXPORT 199

" We all have some advantages over one another,"
said the late Mr. Arthur Chamberlain, " and we had
much better put all these advantages together, and
pit our combined best against a foreign country.
If we do that we shall then constitute a better whole
than either Germany or America."

As with most present-day problems, the Govern-
ment is endeavouring to do something in the matter,
and, as is almost always the case, they are building
from the top, working from a central department,
and attempting the impossible. The Foreign Office
has awakened to the need for improvement in our
export machinery, and has consequently made a
bargain with the Chambers of Commerce for the
better collection and use of Consular information.
The Consular Service is to be strengthened, and
Consular Reports are to be circulated with greater
promptitude through Chambers of Commerce.
Special forms are to be available for members
of Chambers of Commerce who will be able to state
what are their requirements, and Consuls will
endeavour to fill those needs.

This display of energy on the part of the Foreign
Office is much to be regretted, as it represents the
patching up of a system which, as I have tried to
show, is thoroughly bad in principle. British Trade
will never reach its required dimensions so long as
the information and the assistance given to it is
that collected by Consuls and officials of Chambers
of Commerce, all of them excellent and well-
meaning persons, but none of them experienced in

200 THE TRADE OF TO-MORROW

particular trades. It is imperative that we should
learn from the Germans and the Americans in these
matters, and decide that every trade shall be dealt
with separately and given its own machinery for
dealing with each foreign market.

The labour problem and every other problem will
in the end depend upon proper distributing and sell-
ing arrangements abroad. It is useless to increase
output, to improve machinery, or add to our pro-
ductive capacity unless we have the proper facilities
for the disposal of our productions. In this matter
of distribution we have one of the weakest links in
the British commercial chain.

My suggestion is, therefore, that every Trade
Council should have as one of its duties the work of
promoting foreign trade in the products of its
industry. Each Council will thus find it necessary
to appoint an Export Committee and Export
Officers, and to amass for its use all the statistics
and information that are available with regard to
its industry. When that is done, trade statistics
and commercial information will assume a new signi-
ficance. They will be prepared by experts who know
what is wanted ; they will differentiate between
classes of goods and grades of materials ; they will
be of real value to the business man. The Export
Officers of each Trade Council will be responsible
for the proper representation of that trade in every
market of the world. Co-operative advertising
and exhibition schemes in foreign markets will
become the order of the day. Those readers who

EXPORT 201

had the opportunity of visiting the last few Inter-
national Exhibitions will be aware that by far the
best exhibits at Brussels, Ghent, and Turin were
those arranged on co-operative lines by the Society
of Motor Manufacturers and Traders, the Publishers,
the Textile Printers, and other organised bodies.

To sum up this question of export, the position is
that American trusts have done extremely well,
that German cartels have done better, and that
British co-operation, if it can be brought about, will
do best.

CHAPTER XIX.

SUNDRY QUESTIONS.

The number of questions which might be considered
in connection with the study of the development of
trade is legion. There is literally no end to them,
which fact is the strongest argument of all for the
adoption of a bold scheme of devolution and the
setting up of numerous little authorities so that
all these things may be decentralised.

For instance, we have so far said nothing about
the development of the Empire, the arrangements
that will undoubtedly be made for facilitating trade
within the Empire, the need for becoming self-
supporting with regard to certain raw materials and
key industries. It will, however, be obvious that
these problems are much more likely to find a
satisfactory solution when we ourselves are organised
at home. It is altogether characteristic of the
British way of doing things that our statesmen
should be inviting us to make orderly arrangements
with regard to trade covering half the globe, while
we are in a condition of chaos so far as the trade of
this little island is concerned.

SUNDRY QUESTIONS 203

To take a concrete example, let us suppose that
some American trade has secured too much of a
foothold in the Australian market. It is, therefore,
proposed to make some arrangements for tariffs,
or shipping rates or subsidies, in order to divert that
trade within the Empire. Such arrangements as
these are definitely suggested by leading statesmen.
It will be seen at once that any such scheme cannot
be carried out with the maximum success until the
home industry concerned is so organised as to be
in a position to express an opinion and give expert
advice upon the matter.

We have avoided any reference to retail organisa-
tions. This is a subject by itself, yet very closely
related to that of manufacturing organisations. The
principles underlying both are the same. It is
obvious that if the State were to set up a system of
Statutory Trade Councils, that system would have
to embrace every form of trading, manufacturing,
wholesaling and retailing. The retail associations
that would grow up in this way would constitute
a very useful check upon manufacturing associations.

Then there is a whole series of professional and
semi-professional associations. It will be seen in
the recommendations set out in our last chapter
that we ask for a trading franchise, which must, of
course, be also a professional franchise. Every
man is to have a vote according to his trade. In
this way, whatever may be the form of each man's
activities he will secure a right to a vote in some
statutory association. The system must be uni-

204 THE TRADE OF TO-MORROW

versal in its application, and it would have the effect
of making ^not only trade unions and trade associa-
tions, but retail bodies and professional societies,
absolutely representative in their character.

It would cover, for example, Banking, and would
give us an official Bankers' Council with statutory
obligation to provide the nation with such banking
facilities as were required, and would remove the
need for the Government to dabble in banking in the
way that it has recently done with the British Trade
Corporation, a very necessary and useful institution
of that half-baked variety to which we seem to be
committed in this country. The mere statement of
the fact that it is to have a capital of ten millions,
that it must not commence business until at least
£250,000 has been actually paid up, is quite sufficient
to show how inadequate it is to deal with the vast
needs of the future development of British industry.

There is another great subject that should be
explored did space permit. Exhibitions and adver-
tising, when we come to deal with whole trades,
assume an importance that has not been previously
realised. The duties of the nation in the matter
of foreign exhibitions was recognised in a small way
by the establishment of the Exhibitions Branch of
the Board of Trade. Under a Minister of Commerce,
supported by the numerous Trade Councils, the
British nation could go out into the world with
exhibitions worthy of British industry.

It is useless to speculate how much better we
should have been prepared for war had trade been

SUNDRY QUESTIONS 205

organised before 1914. There can be little doubt
that our enemies have obtained great advantages
over us from the facility with which they were able
to summon to their aid whole industries, and use,
instead of improvised Directors and Controllers, the
trained officers of German cartels for national
purposes.

CHAPTER XX.

A TRADE ELECTION.

It is always very difficult to foretell exactly what
the results of a new scheme may be, and it is more
than usually difficult to prophesy when the subject
is connected with trade and industry, markets and
futures. My contention is that the interest in a
trade which would be created by a statutory power
like the proposed Trade Council, and the bringing
together of the leaders of that trade for mutual
discussion and common action, must lead to better-
ment and progress. But there is at least one detail
in my proposals about which one can prophesy with-
out much fear of error and with a very fair amount
of certainty.

It is suggested that each trade should be provided
with a statutory Council elected like our local
authorities and holding office for a period of, say,
three years. This Council would be elected by the
various trade associations and trade unions interested
in one industry. The triennial election of the Trade
Council would focus all the many questions affecting
the trade and give an opportunity to everybody with
views on the development or betterment of that
trade to come into the open and have his schemes

206

A TRADE ELECTION 207

discussed. The mere fact of holding an election in
the Furniture Trade would bring out every idea for
improvement and progress, and would cause a
general discussion of trading problems which must
have a powerful influence for good upon the trade
as a whole and each individual member of it.

We therefore propose to indulge in a little
prophecy, and endeavour to describe the proceedings
at an election of the Furniture Trade Council.

We will imagine that every furniture man is a
registered voter for this purpose, and that the Furni-
ture Trade Council has been in existence for a period
of three years, and that we are now engaged upon
the second triennial election to that body. In order
to make the prophecy more complete in detail, we
will assume that the trade franchise and the system
of election have been settled on the following lines.

Every furniture man has the right of a voting
membership of one of the trade associations or trade
unions. We will assume that there are fifty-nine
seats on the Furniture Trade Council, this number
of fifty-nine having been agreed as convenient in
order to provide sufficient members to undertake
all the numerous Committee duties that fall within
the scope of the Council. Of these fifty-nine
members, twenty-four are delegates from trade
associations, twenty-four are delegates from trade
unions, and the balance of eleven are aldermen
elected by the Council on the nomination of various
authorities : two are men of science nominated
by the Industrial and Scientific Research Depart-

208 THE TRADE OF TO-MORROW

ment ; two are educational experts nominated by
the Board of Education ; one is a financial expert
nominated by the Bankers' Trade Council. A legal
expert from the Law Society, a statistical expert
from the Board of Trade, and a health expert from
the Ministry of Health complete what may be de-
scribed as the official element in the Council. There
are also a Deputy-Chairman and a Vice-Chairman
elected by the Council on the nomination of the
Ministry of Commerce, and a President, who is elected
by the whole body of Councillors and Aldermen.

The twenty-four delegates from trade associations
are elected : — Fourteen by the National Wholesale
Furniture Manufacturers' Association : six by the
Furnishers' Chamber of Trade : two by the Furnish-
ing Section of the Chamber of Commerce; two by
the Cabinet Trades' Federation : these being the
proportions due to those bodies reckoned by the
strength of their respective membership. The
twenty-four delegates from trade unions are elected
in a similar way by the various unions interested
in the furniture trade, the numbers being allocated
in proportion to the strength of membership.

This Council has, then, been working for a period
of three years, and having completed its statutory
term, has to seek the suffrages of its constituents.

In order thoroughly to appreciate exactly what
will now happen, the reader should take an oppor-
tunity of inspecting the post bag of a Member of
Parliament for, say, three consecutive mornings.
He will then be in a better position to understand

A TRADE ELECTION 209

the full significance of the introduction of a system
of election into an industry like the Furniture
Trade. Many hundreds of tons of literature which
is now delivered annually to Members of Parliament
and candidates for Parliament would be diverted,
and delivered instead to members and candidates
for the various Trade Councils.

A great saving and a great improvement would
be introduced merely in this way. There are many
hundreds of societies with excellent objects who
have no means of carrying those objects into effect
except by the almost useless method of worrying
Members of Parliament about them. Seeing that
most of these subjects are of no interest to Members
of Parliament, or at least that Members of Parliament
have no interest in them and understand little or
nothing about them, the waste of effort in good
causes in this way alone is enormous. All these
propagandists will now be able to approach the right
people in the numerous trade elections that will be
held. When the candidate for Council honours in the
Furniture Trade opens his post the morning after
nomination, he will find something like the following.

The Society for the Introduction of the Metric or
Decimal System will send him specimens of their
literature and invite him to pledge himself to an
alteration of those mediaeval methods which, accord-
ing to their view, hamper our progress in foreign
markets. There will be some interesting light
reading to keep the candidate busy for hours, enter-
ing deeply into arithmetical matters which will

210 THE TRADE OF TO-MORROW

probably be quite beyond his range. A little further
down in his post bag he will find another letter from
another Society who will tell him that the British
system of weights and measures is based on the
measurements of the earth and the Pyramids, that
it has in fact divine origin, and that no vandal must
be allowed to interfere with it. It will be pointed out
that the cost of the alteration would be enormous,
that it would undermine the whole of our industrial
structure, and that no benefit could possibly accrue.

The Union of Clerks and Shop Assistants will then
seek the attention of the Trade Council candidate,
and will ask for permission to wait upon him in
deputation in order to explain their objection to
the system prevailing in the furniture trade in the
north, and to ask him whether he will pledge himself
to vote for the universal application of the London
system to the whole of the trade. If he is prepared
to take that view, the Union of Clerks and Shop
Assistants will pledge themselves to support his
candidature. If not, he will be threatened with the
dire penalty of being published in their black list.

The Incorporated Society of Secretaries will
call attention to the prevalence in the furniture trade
of the practice of employing clerks without qualifica-
tions as secretaries of limited companies, and demand
action by the Council.

The Early Closing Association will point out that
the furniture trade is one of the worst offenders in
the matter of shop hours, and that they have already
secured an undertaking from the Drapery Trade

A TRADE ELECTION 211

Council that if the Furniture Trade Council will
enact the closing of retail establishments half an
hour earlier on Wednesdays, the Drapery Trade
Council will follow suit. As the two trades cater
for the public in kindred ways, uniformity of action
between them is essential.

The Workers' Educational Association will send
a really big parcel of literature and will call the
attention of the candidate to the very little that is
done by the Furniture Trade Council in the way of
endowment of exhibitions and scholarships. If the
candidate will sign the enclosed form and undertake
to support the aims and objects of the Workers'
Educational Association, that body will in return
print and circulate to the whole of the electorate
special literature inviting support to his candidature.

A communication will next be received from the
Shipping Trade Council, which will ask the candidate
to express his views as to action which they propose
to take in order to bring the Railway Companies
to heel in connection with through bookings for
small consignments via the Panama Canal.

The Home Rule for India League will also write
to the candidate and send him a lengthy pamphlet,
entitled " India's Appeal to Canada," pointing out
that the furniture trade in Canada by means of the
importation of Hindu labour is securing an advan-
tage at the expense of the furniture trade in other
parts of the Empire, and inflicting injustice and
wrong upon India. The candidate will, therefore,
be invited to use his influence if elected to the Furni-

212 THE TRADE OF TO-MORROW

ture Trade Council, to bring the Canadian furniture
people to reason in this important matter.

To the ordinary reader, this weary catalogue of a
single morning's post received by the candidate for
the Furniture Trade Council may seem fantastic,
but those who have any experience of the corres-
pondence of a public man will agree that the descrip-
tion is not only true, but that the nature and variety
of the subject matter are understated and under-
estimated.

So far we have merely dealt with general public
questions, many of them of great importance and
upon which these Trade Councils may have a very
direct and practical influence. If, however, Trade
Councils were to be established merely in order to
relieve Members of Parliament of the attentions of
these numerous excellent societies, little could be
said in support of them.

The candidate for the Furniture Trade Council
will, of course, have his life worried out of him by
people with ideas, schemes, and grievances in connec-
tion with the trade itself. A single morning's
postal communications of the candidate under dis-
cussion will, in addition to the general matter
mentioned above, be something like the following.

The Wycombe Chair Makers will write to call
attention to the absurdly antiquated samples of
furniture installed at Woolwich by the War Office,
and the stupidity of that body in insisting upon
present-day supplies being made to out-of-date
patterns. They will point out that if the War

A TRADE ELECTION 213

Office would only take advantage of modern methods
of manufacture and instal machine-made samples
and invite tenders for machine-made goods, a lot of
expense would be saved to the nation. The candi-
date will be asked whether he will pledge himself
to agitate through the Trade Council and the
Ministry of Commerce for an alteration in the
procedure of the War Office.

The Furnishing Trades' Benevolent Association
will write, pointing out that the income of the Charity
is altogether inadequate to deal with the demand for
pensions and places in the Orphanage, and suggesting
that the F.T.C. should be empowered to make a
grant from public funds of £2,000 a year to form a
fixed income which would enable them to carry on
their work with a greater degree of security and
success. The Benevolent Association would offer
the nomination of six places on their Executive
Committee in return for this grant, and invite the
candidate to move in the matter in the new Council.

The Midland Committee will write to call atten-
tion to the abuses which exist in consequence of the
practice that has grown up of builders undertaking
cabinet work, and enclose a number of rules which
they suggest should be adopted, defining the limits
of the activities of builders in interior woodwork.

The Retail Section of the Furnishers' Chamber of
Trade will send to the candidate a manifesto object-
ing to the practice adopted by certain manufacturers
of selling surplus stocks through auction sales, and
asking the Trade Council to legislate on the matter.

214 THE TRADE OF TO-MORROW

A communication from Mr. S. J. Waring will
be the next to be opened, in which he will announce
his intention of organising a great national campaign
on the subject of art and economy. Mr. Waring
will point out how the union of art and economy
would bring happiness to the homes of the million,
while incidentally benefiting the furniture trade.
He will suggest that the Furniture Trade Council
should adopt the subject and undertake this great
work in its official capacity, his theory being that
if the public interest could be aroused to a due sense
of the importance of surrounding each citizen with
things of beauty, the moral and intellectual tone of
the nation would be greatly improved.

The Design and Industries' Association will ask
the candidate to agree with them that most of the
furniture which is made violates all artistic principles,
and they will also demonstrate that a simplification
of design would not only add to artistic values but
reduce costs of manufacture. They, therefore, ask
for the right to nominate three aldermen on the new
Trade Council to promote these objects.

The Society of Polishers will address to the candi-
date a manifesto asking for a re-arrangement of the
constitution of the Workshop Committees in the
factories of the trade, pointing out that polishers in
proportion to their importance and numerical
strength, are not properly represented on these
Committees.

The Chair Makers' Union will ask the candidate
to support a recommendation that the trade should

A TRADE ELECTION 215

adopt the Unemployment Section of the Insurance
Act. The Carvers' Society, on the other hand, will
send a strong protest, threatening to vote against
the candidate unless he will undertake to oppose
by every means in his power the imposition of
Unemployment Insurance upon the Furniture Trade.

There will then be a whole series of communica-
tions from interested parties on the never ending
subject of railway rates, and each will send remark-
able specimens of inequalities and call for emenda-
tions in the classification of different articles.

Next there will be a dozen or so letters and
memoranda from people interested in alterations in
the tariff, either here or in the Colonies or in foreign
countries.

An enthusiast will write and invite the candidate's
attention to a scheme for the establishment of a
co-operative insurance office within the furniture
trade, and will give figures to show what large sums
are annually paid by this trade for the simple pur-
pose of swelling the dividends of Fire Insurance
Companies.

The candidate will next be invited to devote his
attention to the intricate question of Profit-Sharing
in its application to furniture manufacture.

The Society for the Promotion of Public Health
will circularise the candidate and give him informa-
tion and figures on the subject of lung trouble in the
bedding department of the furniture trade, and ask
him to support the regulations which they suggest
for the elimination of this evil.

216 THE TRADE OF TO-MORROW

There will then be communications from the Hire
Traders' Protection Association, seeking the in-
fluence of the Furniture Trade Council to amend
the law of distraint, so that they may the better be
able to enforce the payment of instalments under
hire purchase agreements. And to balance these
will be letters from those who take the view that
purchase on the instalment plan is an immoral
proceeding, and that the Furniture Trade Council
ought to use its powers to get rid of it.

If the reader by this time is not thoroughly weary
of the catalogue, there is a great deal more to go
through before we have exhausted the morning's
post of the candidate for election to the Furniture
Trade Council. We have so far dealt with two sets
of subjects covering questions that are at present
before the public and the trade. The first are
matters of general public interest : the second
matters of more particular trade interest. But there
is still a third batch of subjects which have only
come into the region of practical politics since the
establishment of the Furniture Trade Council, for,
be it remembered, we are now discussing the second
triennial election of that body.

The candidate will, therefore, have to withstand
a terrific bombardment from folk who are suffering
under a sense of grievance from the actions of the
previous Council, and those who are full of new
schemes for the betterment and advancement of the
industry. The next batch of letters will therefore
contain communications of the following kind.

A TRADE ELECTION 217

The Gloucester Committee will call attention to
the inadequacy of the Bristol University's technical
education in its application to furniture, and point
out how badly handicapped is the West of England
in this respect • as compared with Yorkshire and
Lancashire, the technical schools under the
Manchester, Leeds, and Sheffield Universities being,
in each case, far superior to those installed at Bristol.
The candidate will be required to pledge himself
to bring the subject before the Education Committee
of the F.T.C., and not rest until that Committee has
persuaded the Education Officer and the Ministry of
Commerce to move in the matter.

A Sheffield elector will point out that the instructor
in Cabinet Making at the local Technical School,
although he holds a lot of South Kensington certifi-
cates, is not a practical man, has never been at the
bench, and is consequently not fitted for the post.
The candidate will be urged to see that all such
appointments are given to men of actual experience.

Some bright brain will then unfold to the candi-
date a scheme for the co-operative use of railway
trucks, framed on Mr. Sidney Webb's well-known
plan for reducing the expenses on the transport
of coal, while another expert will demand the estab-
lishment of a Furniture Trade Motor Service, point-
ing out that in this way a special type of vehicle
suited to the peculiar requirements of furniture
could be introduced, and much expense in packing
and breakages thus avoided.

But the serious part of the candidate's work will

218 THE TRADE OF TO-MORROW

begin when he is invited to inquire into the delin-
quencies of the Furniture Trade Commissioner
in Egypt, delinquencies which are proved by the
fact that the trade's exports to Egypt are only one-
third in value of those to Nigeria. This poor result
will be attributed to the fact that the Egyptian Com-
missioner was appointed without due care, that his
previous experience and training did not fit him for
the job, and a change should therefore be made.

An export enthusiast will call attention to the
utter inadequacy of the State grant of 2s. 6d. per
£100 which was secured by the late Council for the
encouragement of export. He will point out that
this sum only produces £1,500 per?annum, and that
that amount of money requires multiplying many
times in order to provide a sufficiently large and
expert staff to look after the interests of the trade in
foreign markets. He will, therefore, suggest that
the Treasury should be approached with a view
to raising the grant to 3s. 6d. per £100, and that a
levy should be made upon the trade for a further
3s. 6d. per £100, so that the Council might have at
least £4,000 or £5,000 a year to spend in propaganda
work abroad.

Another communication, from North of the
Tweed, will complain of the unfair allotment of
space in the Travelling Exhibition of Furniture
Samples which the F.T.C. had sent round the world,
and demand that in future in arrangements of this
kind space should be divided on a territorial basis
instead of a capital basis. Under such a system of

A TRADE ELECTION 219

division Scotland would secure one-fifth of the
available accommodation instead of only one-seventh
which was allotted to it under the capital method.

A manufacturer in Manchester will object to the
arrangements made by the Furniture Trade Council
for a subsidy to the Central Industrial Research
Institution, and insist that the Furniture Trade is
of sufficient importance to warrant a research staff
and building of its own, and point out the additional
expense thus incurred would be more than rewarded
by the benefits that would accrue to the industry.

Another highly technical and controversial matter
to which the candidate will have to give his atten-
tion will be the Secondary Education scheme now
in operation, under which youths from fourteen
to eighteen are compelled to attend a technical
school at specified times. The instruction given,
the hours arranged, the instructors employed, and
many kindred matters will all come under review.

Innumerable arguments will next be put forward
for an emendation of the official costing system,
and the candidate will be invited to acquaint himself
with figures to prove that the official estimate of
warehouse charges at 20 per cent, is far too high or
far too low, while y\ per cent, for overhead charges
is out of all reason.

To exhaust the post of the candidate we should
have to wade through a great many more letters.
One^more only must be mentioned, which comes
from the National Standardisation Committee,
offering the candidate their support if he will move

220 THE TRADE OF TO-MORROW

for the appointment of a Standardisation Committee
of the Furniture Trade Council, and pointing out
how the adoption of the principles which have saved
the British Engineering Industry would also tend
to great economies and greater efficiency in the
manufacture of furniture.

This list speaks for itself. To the reader who is
not deeply interested in the progress of industry it
may appear to be composed of a lot of minor matters,
but to any experienced manufacturing man who will
read it with the necessary amount of imagination,
it will open up vast possibilities, possibilities which
cannot be realised until we find some way of making
the study of the furniture trade and every other
trade a matter of necessity to those concerned in it.

The effect of such an election campaign as we have
described would be to decentralise all sorts of
important questions, and bring them before the
attention of men who have the experience and the
power to deal with them. But it would do a great
deal more than that. It would awaken general
interest in the welfare of the furniture trade. It
would teach every member of that trade a great deal
about it of which he was not previously aware. It
would turn every furniture man from an amateur
into an expert, because it must never be forgotten
that under the individualistic system we are all of
us amateurs. We are struggling on with our par-
ticular branch of business with the advantage of such
experience as we have been able to pick up within
the four walls of our own shop, but we have never

A TRADE ELECTION 221

had the advantage of full discussion of all our
problems by all those engaged in a similar way.

The introduction of the franchise and of a system
of election to Trade Councils will have another very
important, indeed, a revolutionary, effect. It will
be found that the men elected to these Councils will
not in most cases be the same persons who now
occupy the seats on self-appointed and non-repre-
sentative bodies of trade associations. As soon as
the trade association is endowed with real powers,
powers to do good or to do harm, as soon as it is
recognised as an authority by the Government,
then the great body of traders who have hitherto
stood aloof from the association movement will begin
to take an interest in it. The serious men in every
trade, the men whose lives are devoted to business,
will come out into the open, and most of them
have far superior claims to positions in the trade
authority than the amateurs to whom the repre-
sentation of trade is very largely left through
voluntary associations. The best men in industry
have no time to waste, and therefore refuse to attend
association meetings where serious business cannot
be conducted. It may thus transpire that the
views which have been so loudly proclaimed by self-
appointed leaders of industry with platform and
other ambitions, are not the views of industry at all.

The very existence of a Furniture Trade Council
with a Furniture Trade electorate at the back of it
would bring a vigour, life, and power to the industry
that it could not secure by any other means.

CHAPTER XXI.

RECOMMENDATIONS.

In my introductory chapter I outlined a system
of statutory Trade Councils working under a Minister
of Commerce, which seems to me to offer a solution
of most of our industrial problems. Having en-
deavoured to show in a cursory way the need for
these bodies, and having pointed out a few of
the many fields which are open to their activities,
it now remains to set out the suggested organisa-
tion rather more definitely and in greater detail.

It would be idle to pretend that the following
scheme is not full of points which will require
much discussion. It must, therefore, be regarded
as a first attempt at a working plan, and nothing
more.

A. A Trade Franchise.

The basis upon which the whole scheme rests
is the introduction of the representative principle
into trade, and this involves the establishment of
a trade franchise. The exact form that this
franchise would take, the exact qualifications that
would be necessary to it, and its final working

RECOMMENDATIONS 223

details, must be matter for fuller consideration
and debate. But the following rough suggestions
will at least show that the idea is not unwork-
able.

I would open out the existing trade associations
and trade unions in much the same way that
the Friendly Societies were opened out by the
Insurance Act ; and I would give to every man
and woman employed in an industry the right to a
voting membership of one or other of these bodies.
It is obviously impossible to compel a trader to
join his trade association, and it is equally im-
possible to compel a trade association to admit
an individual to full membership. The association
or the union must have the right of selecting its
own members for its own ordinary purposes, but
just as the Insurance Act has multiplied the mem-
bers of the Friendly Societies without affecting the
rights and interests of the original members, so
these trade associations and unions might have put
upon them the obligation to admit to some form
of limited - membership any qualified individual
who applied. These associations and unions would
thus secure the status of Approved Societies and
would become Electoral Colleges for the Trade
Councils. The associations and unions would then
become truly representative, and when required
the real views of an industry could be ascertained
through them.

All sorts of difficulties will arise in the settlement
of this suggested franchise, such questions as the

224 THE TRADE OF TO-MORROW

right of a limited company to a vote, the position
of the casual labourer, the extension of the vote to
unskilled as well as skilled workers, the difficulty
of the man who is a builder's labourer one day and
a hop-picker the next. But these are all details,
which are by no means impossible of adjustment.
In any case, the trade franchise can have no finality
about it. The first arrangement is sure to fail to
meet with everybody's approval, and as industry
alters and conditions change, so there will be a
constant need for adjustment of the qualification
for the vote.

When the Trade Council was properly established,
the unions and associations would still have much
work left to them. In the first place, they would
each become a sort of party caucus of the Trade
Council, but they would, in addition, act as the
link between the individual trader and the Council.
Each Trade Councillor would be responsible to
his association or his union, and would probably
have to answer to the Executive for his actions or
his inactivities.

B. The Trade Council.

I have continually referred throughout this book
to the need for Trade Councils, and the question
arises as to how they are to be brought into being.
It is obvious that this can only be accomplished
by the Government.

The necessary Act of Parliament establishing
the Ministry of Commerce and the Trade Councils

RECOMMENDATIONS 225

would probably be, in the first place, a permissive
Act.

I would give to any association, society, or
union the right to apply to the Minister of Commerce
to have its trade brought within the scheme and
a Trade Council constituted. On receipt of such
an application, the Minister of Commerce would
hear the case, and if he were satisfied that the
applicants were of sufficient standing, he would
advertise his intention to set up a Statutory Trade
Council in that industry.

Every other union or society having interests
which would thus be concerned, would then have
the opportunity of becoming Approved Societies
for the purposes of the election of the proposed
Trade Council. The Minister of Commerce would
then adjust the interests of each of these societies,
giving to them voting power in proportion to the
strength of their membership. The voting power
would be divided into halves, one for capital and
the other for labour, and would be distributed
between the employers' associations and the labour
unions in their proper proportions. The trade
would thus become a recognised industry in much
the same way that a parish becomes a borough or
a borough a city.

Having adjusted all the interests in the way
described, the Minister of Commerce would then
appoint returning officers to direct the election
of the first Trade Council.

It will be noticed that one great difficulty has

226 THE TRADE OF TO-MORROW

been overcome by these processes in connection
with the selection of trades. For in this way a
sort of natural selection would develop, and the
resulting recognised trades would in all probability
make a very different list from any schedule which
the authorities might compile of our leading in-
dustries. For instance, Cotton might have one or
two Trade Councils. The cotton industry might
come to the conclusion that it could work better
with one, or the spinning and weaving branches
might prefer to work independently. Engineering
might have twenty Trade Councils, and, indeed, it
is likely that something of the kind would happen.
These difficulties which have baffled so many en-
thusiasts in the federation of so varied an industry
would be overcome. As new trades arose new
Trade Councils would become necessary, and as
the character of trades altered so Trade Councils
might be amalgamated or reconstituted.

C. The Minister of Commerce.

In the foregoing it will be obvious that there
is a great deal of work which would fall upon the
shoulders of the Minister of Commerce merely in
the regularisation of all these proceedings. The
greatest objection to the appointment of a Minister
of Commerce would be overcome if his appointment
were accompanied with the setting up of numerous
Trade Councils. There would then be no fear that
the Minister might take upon himself to interfere
with industry without proper advice. We should

RECOMMENDATIONS 227

be free from any risk of the repetition of our war-
time experiences, or of the serious damage resulting
to trade and commerce through the operations
of Government Departments.

The work of the Minister of Commerce would be
to set up Trade Councils, to regularise their pro-
ceedings, to supervise the registration for the trade
franchise, and to give effect to the recommenda-
tions of Trade Councils and bring those recommenda-
tions before the notice of other Departments and
other Governments. He would not be expected
to initiate trading schemes, or to touch the details
of trading matters at all.

The scheme would bring about another great
improvement in our present arrangements. It
would clearly define the spheres and activities of
the official and of the business man. The official
would have ample scope for the exercise of all his
abilities at the Ministry of Commerce on work
which he and he alone could do, while the business
man would be relegated to the Trade Council,
where his knowledge and experience would have
every opportunity for useful work.

The Ministry of Commerce would, as I have sug-
gested in "Trade as a Science," divide itself into
six or seven departments, dealing with the
main branches of the work of the Trade Councils.
There would have to be a number of Under
Secretaries, handling such specialised subjects as
education, research, export, statistics, finance, wel-
fare, and exhibitions. Each of these departments

228 THE TRADE OF TO-MORROW

would endeavour to establish in each Trade Council
corresponding departments, so that every industry
would possess a perfect organisation for handling
these great subjects. In this way the following situa-
tion would arise in connection with, say, Export.

There would be at the Ministry of Commerce an
Export Department and an Export Secretary,
whose duties would be to co-ordinate the efforts
of the Export Officers of different trades. There
would be an Export Committee and an Export
Officer for every industry, and each industry would
be able to deal with the problems of exportation
in a way that would overcome the special difficulties
of each trade. The efforts of all these Export
Officers would be co-ordinated and regulated by
the Central Department at the Ministry of Com-
merce. We should remove the greatest weakness
of our present attempts to assist export, the weak-
ness which arises from dealing with all trades at once.

D. Officials of the Trade Council.

It is obvious that the scheme which we are con-
sidering involves the appointment of great numbers
of officials. The suggestion is that every trade
would require a complete organisation of its own,
with officials at home and officials abroad. There
are very few British industries which are not worth
the undivided attention of an expert selling staff
in every market abroad. In this way we should
have in the Argentine fifty different staffs of trade
experts looking after the interests of fifty different

RECOMMENDATIONS 229

trades. It does not follow that there would be
more men in the Argentine on behalf of British
trade than there are at the moment, but instead
of the men who are there being in direct opposition
to one another, exhibiting the dirty linen of the
English competitive system to the gaze of the
Argentine buyer, we should have the work so re-
arranged that each man would be able to speak on
behalf of the whole of the industry in which he was
interested.

There would be no fear of these positions assum-
ing the character of permanent public appointments,
or of these officials acquiring the habits of the
employee in a Government Department. They
would all be commercial appointments ; they would
be made by Trade Councils composed of experts;
they need have no more fixity of tenure or con-
tinuity about them than the ordinary commercial
appointment of to-day. In fact, the type of man
who would apply for most of these positions would
probably not consent to, or desire, arrangements
which had any finality about them. The position
of representative in Chili for the Boot Trade Council
would only be accepted by some man of high
commercial ambition, and would probably be re-
garded by him as a stepping-stone to something
else. He would probably require some arrange-
ment for payment by results, and, indeed, his
emolument in any case would have to bear some
relation to the success of his efforts. The higher
grade of business man, to whom all these posts

230 THE TRADE OF TO-MORROW

would appeal, is not prepared to be bound, and is
not looking for a pension, and there is, therefore,
no reason why any of these offices under Trade
Councils should be treated in the same way as a
position in the Treasury or the Post Office.

E. Finance.

The Trade Council will, of course, require money.
This is a subject which I have purposely left un-
explored. It will be seen that in principle there is
no reason why the Government should not provide
the whole of the money that is necessary for the
running of a Trade Council. If that Council is
representative of the whole industry, if its object is
the welfare of all engaged in that industry, if it is
charged by the Government with the duty of watch-
ing the national interests in so far as they concern
that industry, there is a full case for the payment
by the Treasury of all its expenses. Indeed, a
good many of the expenses which it would direct
or control are already paid by the Government.
Research, education, statistics in the shape of
Board of Trade Returns, and other similar matters
which would come under the control of the Trade
Council, are already provided with public funds.
But here, again, new conditions would arise, and
it would in all probability be found that an in-
dustry would not consent to be entirely dependent
upon the Minister of Commerce for the funds
which its Council would control.

I am inclined to think that finance would not

RECOMMENDATIONS 231

in any case prove a barrier to success in these
matters. Business men are never unwilling to find
the money for any good scheme.

In conclusion, I submit the foregoing suggestions
as a broad, rough basis for the solution of the great
problem of Industrial Reconstruction. They are
obviously capable of improvement and indefinite
amplification, but they represent the lines along
which we must travel. I can at least claim that
my scheme, in principle, if not in detail, overcomes
many of the difficulties ahead of us.

(1) It deals with the task in a fundamental
way, and is not a patchwork or temporary
expedient.

(2) It puts the politician, the official, and

the business man, each in his proper
sphere, and thus avoids the most dis-
astrous of our war-time blunders — the
mixing of the functions of these three
classes.

(3) It renders unnecessary great central

Government trading schemes which,
however vast, must always be insigni-
ficant in relation to the trade of our
Empire.

(4) It repairs the inadequacies of our indi-
vidualistic system without destroying
its qualities.

(5) It ensures a close study by experts of
every one of our productive trades,

232 THE TRADE OF TOMORROW

each trade as a whole, and provides for
its fullest development.

(6) It gives an official status to trade, and

relieves it of the social stigma which has
been such a handicap.

(7) It enlists the sympathies and energies of

labour on behalf of the nation's trade.

(8) It removes the feeling of inequality of

status, which is the main cause of
labour unrest.

(9) It places us in a position to compete

with other industrial nations.

(10) It is the embodiment of all that is best

in the German and American industrial
scheme, and avoids the abuses of Car-
tels and Trusts.

(11) It gives the maximum of opportunity

for individual effort, and provides a
chance for every master and workman
to share in the nation's responsibilities.

(12) It makes our industries a part of our

Constitution.
I would not dare to make such claims if I were
the author of these ideas. But readers will have
noticed from the numerous quotations I have given
that many brains have thought these questions
out, and all that I have done is to endeavour to
frame from their deliberations and conclusions a
definite and, as it seems to me, a practical policy
for British Trade.

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